State pension to be increased in the UK, good news for pensioners

Welcome to iCalculator's monthly Tax and Finance guide and news for January 2020. In this month's news we take a look at:

1. The confirmation of hike in state pension amount.
2. The triple lock system / guarantee.
3. The amount of hike for different pensioner groups.
4. Additional state pension hike.
5. The offset of the state pension hike by TV license fee implementation.

Key points in Tax and Finance guide and news for November

1. Millions of pensioners will be benefitted by the pension hike.
2. The triple lock system, enables pension hike based on 3 criteria.
3. The data is confirmed by the ONS.
4. The hike is based on the wage growth figures from July to September 2019.
5. The hike will be effective April 2020.
6. Amount of pension hike will be different for all pension groups.
7. The additional state pension hike will be different than the state pension hike.
8. The pension hike will be offset by the requirement of TV license fee, which will be required to pay by the pensioners above the age of 75 from next year.

There is good news for pensioners in the UK, Millions of pensioners throughout the UK will receive will receive a pension hike of 3.9% in the coming year. This is determined by the state pension 'triple lock',. Under this the state pension gets a yearly hike on the basis of 3 criteria: Inflation rate, wage growth or 2.5%, whichever is the highest in the preceding year by September.

In 2019, as confirmed by the CPI measures the inflation rate was at 1.7%. The state pension will rise by 3.9% this year, which is on the basis of the wage growth figures from July 2019 for three months. The rise in confirmed by the ONS - Office of National Statistics of the UK. This is considered to be the biggest rise in pension since 2012.

Amount of increase per week for different pensioners

This hike will be applicable from April 2020. The state pension which is standing at £168.60 will be increased by £6.60 resulting in a total amount of £175.20 in the coming year. This group of pensioners will receive a total annual hike of £343.20, which will bring their annual pension income to £9,110.40.

Basic state pension for single people who had reached their pension age by April 2016 are paid at £129.20 per week right now, will be increased to £134.25 per week with the increase of £5.05. The amount of rise adds up to £262.60 for the year 2020-21, which will result in total pension income of £6,981 in the coming year.

Whereas, state pension for married couples will be increased by £8.10 and will result in a total amount of £214.75 which is currently paid at £206.65 in the year 2019-20.

The additional state pension after the rise

Your state pension is made up of two components: the amount of basic state pension and an additional state pension, that is if you reached your pension age before April 2016. The additional state pension is increased by the CPI inflation rate every year and is not linked to triple lock guarantee.

Your pension earning of basic state pension is based on the number and amount of national insurance contributions you have made. However, if you receive any additional state pension, you will see a rise of 1.7% from April 2020.

If you are one of those people who have reached their pension age after April 2016, you will be eligible for the new flat rate state pension, that is explained above.

You may be able to receive more than the full amount under the 'protected payment', however, this is only if you have a build up amount of additional state pension. This will also see the rise of 1.7% in the coming year.

The offset of increase for 1.7 million single pensioners

Along with the good news, this is being speculated that the amount of increase will be offset by the requirement of paying the TV license fee. This fee, till now is not charged to the pensioners, however, from June 2020, the single pensioners aged 75 and above would be required to pay the TV license fee.

The current TV license fee is £154.50 per year, which is likely to be increased next year. According to the calculations done by Royal London, if you deduct this fee from the yearly pension amount after the hike, people will end up with the approximate hike of only 1.6%, which is even less than the current inflation rate of 1.7%