Figures published today by the Department of Work and Pensions show that the new flat-rate state pension will rise by 3 per cent next April – from £159.55 to £164.35 per week.
However the weekly limit for pension credit – a means tested benefit for those on low incomes that tops up the old basic state pension – will only rise by 2 per cent, from £159.35 to £163 per week for individuals and from £243.23 to £248.80 per week for couples.
This is due to the ‘triple lock’ on the state pension, which guarantees that it rises by the highest of inflation, wage growth or 2.5 per cent, while pension credit only rises by the rate of earnings growth.
Over the past year inflation has been 3 per cent and average wage growth 2 per cent.
Those that retired before April 2016 receive the old state pension, which is also rising by 3 per cent in April, from £122.30 to £125.95 per week.
However, the difference between indexation of pensions and pension credit means that poorer pensioners that receive pension credit to supplement their income will be £1.35 per week worse off than those on the new state pension.
According to former Pensions Minister and now Director of Policy at Royal London Sir Steve Webb, in the past the government has “found extra money” to ensure that poorer pensioners received the same increases as others, however this year that has not been done.
Sir Steve Webb said: “It is surprising that the government has decided to give the poorest pensioners the smallest increase.
“For those on pension credit, the rise is below the rate of inflation which will create a squeeze on the living standards of the poorest pensioners. By contrast, better off pensioners will get a full inflation-linked increase.
“For many years pensioner poverty has been falling and it would be worrying if that progress were to be reversed because of decisions like this.”