The state pension will rise by 3.1% today, but the increase is just half of inflation, the measure of the soaring cost of living.
The state pension and government benefits will both rise from today, but inflation, which is 6.2% could hit a 40-year high of 8.7% in the fourth quarter of 2022, according to the Office for Budget Responsibility (OBR).
It comes as energy regulator Ofgem hiked its price cap – which limits how much you can be charged for each unit of electricity and gas you use – by an eye-watering £693 for someone with typical use.
Council tax bills have just gone up as well while higher national insurance tax has taken effect.
Retirees on the full, new state pension, will see their earnings rise by £290 a year.
That’s an increase of up to £5.50 a week from April 2022, in line with last September’s inflation rate of 3.1%.
Pensioners were last year told their incomes would rise by the highest out of inflation or 2.5% – whichever is highest this spring, after the the Prime Minister suspended the triple lock due to Covid- calling off an 8% increase.
A 3.1% rise means those on the full new state pension will see their annual income jump to £9,628.50 – an extra £289.50.
However experts warn it’s not enough to cover the cost of living. The Bank of England has previously warned inflation could reach 7% by September this year. That’s in response to supply disruption and energy price rises.
Centre for Economics and Business Research economist Sam Miley said: “Pensioners will be particularly vulnerable to rising prices, due to the fact that their disposable incomes tend to be lower in the first place.
“Meanwhile, the nature of inflation at present, being heavily concentrated in utility prices, is also set to adversely affect pensioners, given that this makes up a relatively larger proportion of their overall spending.”