‘Daylight robbery!’ Pensioners could lose £1,400 as state pension loses value

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Sturgeon says the removal of the triple lock is 'disgraceful'

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Working pensioners will be nearly £1,400 worse off over the next two years amid the cost of living crisis, Labour has warned. This comes as a result of rising household bills, a hike in National Insurance and the suspension to the state pension triple lock.

A working pensioner who earns the average salary and receives the state pension, while also being required to pay the 1.25 percent National Insurance rise from 2023, will effectively be left with a cut to their income of £770 in the 2022/23 tax year and £622 in 2023/24, according to The Mirror.

This adds up to a combined loss of £1,392.

Pensioners had not previously had to pay National Insurance even if they continued working past state pension age, but this will change from April 2023, when they will need to pay a 1.25 percent levy.

Shadow Work and Pensions Secretary Jonathan Ashworth will today lead a debate in the House of Commons relating to the financial hardships facing pensioners.

He said: “Instead of protecting pensioner incomes as Boris Johnson promised, the Tories are cutting the state pension and clobbering pensioners in work with a tax rise, leaving them worse off by an eye-watering £1,400.

Mr Ashworth described this as “daylight robbery” and said Boris Johnson has “betrayed retired people”

The suspension of the state pension triple lock has meant pensioners will receive less than half the increase to the state pension they were expecting.

Under the terms of the policy, the state pension must increase by the highest of inflation, average earnings growth or 2.5 percent.

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An unusually high level of earnings growth indicated that the state pension would rise by more than eight percent from April 2022, but the Government cancelled that idea.

The earnings link was removed from the triple lock policy for the upcoming tax year as the Government believed an eight percent increase to the state pension would not be reasonable for taxpayers.

By failing to honour the triple lock, the Government broke a manifesto commitment from 2019.

As a result, the state pension will now rise by just 3.1 percent next month, in line with inflation to September 2021.

However, inflation has risen dramatically in recent months and currently stands at a 30-year high of 5.5 percent.

This means the state pension increase is currently failing to keep pace with inflation.

The value of the state pension is expected to be reduced in real-terms by nearly £300, according to analysis by the House of Commons Library.

Even if the state pension increases by 5.9 percent in the 2023/24 tax year, which is the projected rate of inflation for September 2022, pensioners would still effectively lose money according to The Mirror.

Mr Ashworth continued: “Pensioner poverty is increasing with older people facing impossible choices between eating and heating.

“The upcoming NICs rise should be halted this week and action should be taken to reduce energy bills by hundreds of pounds for those who need help as Labour has proposed.”

He said he will use Monday’s debate to “call on the Government to protect all pensioners from the cost-of-living crisis”.

Mr Ashworth added that he will ask the Government to “take immediate action to reduce home energy bills and halt their planned tax rise”.

A Government spokeswoman said: “We recognise the pressures people are facing with the cost of living, which is why we’re providing support worth £21billion this financial year and next to help.

“This includes freezing fuel duties to keep costs down and helping households with their energy bills through our £9.1billion Energy Bills Rebate.

“Our Winter Fuel Payments are also supporting over 11 million pensioners with their energy bills and we are continuing to encourage those eligible for Pension Credit, and the wide range of other benefits it can provide, to make a claim.”

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