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State Pension changes 2022: how much will the State Pension increase in the New Year - and who is eligible?

It has been confirmed that the State Pension will not be increased in 2022 in line with the Triple Lock policy introduced in 2010

Every year, the State Pension is increased in line with the Triple Lock policy commitment, which see’s both the Basic State Pension and new State Pension increased based on whichever of the following is the greatest - increases in prices, average earnings or by 2.5%.

However, for the first time since 2010, the Government has announced that the Triple Lock has been temporarily suspended, due to the economic impact of the Covid-19 pandemic.

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This is everything you need to know.

What changes are coming to the State Pension in 2022?

It was confirmed by the Government at the end of November the changes that would be coming to the State Pension for 2022 to 2023.

According to the Secretary of State for Work and Pensions annual review, announced on Thursday 25 November, it was confirmed that State Pensions are due to be increased by 3.1%, “in line with the Consumer Price Index (CPI) for the relevant reference period (the year to September 2021)”.

The CPI, which is published by the Office for National Statistics, measures the average change from month to month in the prices of goods and services purchased by most households in the UK.

This means that the basic State Pension will increase to £141.85 per week and the full rate of new State Pension will increase to £185.15.

The State Pension is increased every year by the Department for Work and Pensions (Photo: Shutterstock)

The Government explains that this decision was enabled after the Social Security (Up-rating of Benefits) Act 2021 received Royal Assent, with the legislation temporarily suspending the earnings element of the Triple Lock for one year only, “following distortions to the earnings statistics”.

“In taking this decision, the Government carefully considered the fairest approach for both pensioners and younger taxpayers, many of whom have been hardest hit by the financial impacts of the pandemic,” a statement from the Department for Work and Pensions said.

All other benefits will also be increased by 3.1%, in line with CPI - this includes working-age benefits, benefits to help with additional needs arising from disability, carers’ benefits, pensioner premiums in income-related benefits, Statutory Payments, and Additional State Pension.

The weekly earnings limit in Carer’s Allowance will be increased by 3.1%, and the local housing allowance rates for 2022/23 will also be maintained at the elevated cash rates agreed in 2020/21.

From January 2022, British citizens working abroad in certain countries will no longer be able to use this time as qualifying years on their state pension record - this will affect those living in:

  • Australia (before 1 March 2001)
  • Canada
  • New Zealand

When will the new rates apply - and where?

The new rates will apply in the tax year 2022/23, coming into effect on 11 April 2022.

This increase to State Pensions applies across England, Scotland and Wales.

Dr Thérèse Coffey, Secretary of State for Work and Pensions, said: “All of these matters are transferred in Northern Ireland, and corresponding provision will be made there.

Secretary of State for Work and Pensions, Dr Thérèse Coffey (Photo by Leon Neal/Getty Images)

“Some benefits are devolved to the Scottish Parliament, but there are benefits that are still temporarily being delivered by DWP on behalf of the Scottish Ministers under Agency Agreements; these will rise with CPI of 3.1%.

“The Scottish Government will need to bring forward corresponding up-rating legislation in the Scottish Parliament.”

Why has the Triple Lock been suspended?

The Triple Lock refers to the commitment from the Government to ensure that the UK State Pension does not lose its value due to inflation. To make this guarantee secure, the Triple Lock include three separate measures of inflation, with the State Pension increasing by the greatest of either:

  • Average earnings growth
  • Prices, as measured by the CPI
  • 2.5%

It was introduced in 2010, and since then the State Pension has gone up in line with the Triple Lock - however it was suspended this year due to the impacts of the Covid-19 pandemic.

The “distortions to the earnings statistics” mentioned by the Government in its announcement about State Pensions refers to the fact that wages were skewed by the pandemic.

Millions of workers lived on a reduced wage through the furlough scheme as businesses were forced to close their doors - but with businesses now opening back up again, an unusual spike in wage growth has been recorded as workers go back to work and their full pay.

According to the ONS, figures showed that the average UK earnings grew by an annual 7.3%, with the Office for Budget Responsibility predicting this number to rise to 8% in the May-July quarter, which is the period used to determine the State Pension increase.

If the Government had made its decisions using the Triple Lock, as it has done since 2010, an 8% increase would have been applied to the State Pension, instead of the 3.1%.

What’s the difference between the basic and new State Pension?

There are two different types of State Pension offered by the Government - the basic State Pension and the new State Pension.

The basic State Pension can be claimed by men born before 6 April 1951 and women born before 6 April 1953.

If you were born later than these dates, you will have to claim the new State Pension instead.

To claim the basic State Pension, you must have been paid or credited with National Insurance contributions, with the full basic State Pension, currently, paying £137.60 per week.

The Basic State Pension and new State Pension will both increase in 2022 (Photo: Christopher Furlong/Getty Images)

The earliest that you can claim the new State Pension is when you reach State Pension age, which you can check by using the age checker on the Government website.

The full new State Pension is, currently, £179.60 per week, with the money provided to claimants based on their National Insurance record.

Your National Insurance record before 6 April 2016 is used to calculate your “starting amount”. This is part of your new State Pension.

Your starting amount will be the higher of either:

  • The amount you would get under the old State Pension rules (which includes basic State Pension and Additional State Pension)
  • The amount you would get if the new State Pension had been in place at the start of your working life

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