British state pensioners could see a significant increase of £600 a month in their payments under a new policy proposal. A financial expert has suggested that the incoming government could consider a ‘one-off substantial increase’ to bring the UK state pension into line with those of the best-paid European countries.
Potential £600 Monthly Increase for UK State Pensioners
Daniel Abbot, independent financial adviser and chartered accountant at Hoxton Capital Management, tells Express.co.uk: ‘If you look at economic stability and living standards, the UK is most comparable to France.
Therefore, to match the French state pension, the UK would need to increase its state pension by around £600 per month, which is equivalent to a 63% increase.
Why is the Triple Lock Controversial?
The future of the state pension is a hot topic this week, following Conservative proposals to increase pensioners’ personal allowance in line with the triple lock.
Mr Abbot has proposed that a major one-off boost could facilitate the abolition of the triple lock, replacing it with a single measure for increases linked to cost of living rises.
A monthly increase of £600 would take the new full state pension from £221.20 a week to almost £360 a week.
However, Mr Abbot acknowledged that the government would face considerable difficulties in finding the funds for such a substantial increase in one go.
He said: ‘For budgetary reasons, such an increase will not be possible: ’For budgetary reasons, such a large increase in one go is highly unlikely. Thereafter, annual increases in line with inflation would maintain the consistency of the state pension as a percentage of the cost of living.
Mr Abbot also questioned the viability of the triple lock and the future funding of the state pension. He pointed out that ‘The State Pension is primarily funded by the current year’s National Insurance contributions, which are directly linked to earnings.
As a result, when the highest of the three measures (2.5%, wage growth or inflation) is not wage growth, payments increase at a higher rate than the funds collected. Despite this, compared to other European countries, the UK state pension remains relatively low as a percentage of the average cost of living.
‘The UK is not currently ranked in the top ten countries, which include Luxembourg, Spain and Belgium,’ he added.
European Comparisons with Potential Implications
In terms of state pensions, Luxembourg is the most generous, with pensioners in the small country receiving an average of €6,095.87 a month (£5,211.20), according to figures from Almond Financial.
If this amount were equal to that of Luxembourg, British pensioners could receive £62,534.40 a year, almost double the average worker’s salary.
It’s always about the new state pension never the old basic pension, the pensionesr on this have the same bills and living standards
It’s about time our are pensioners are not struggling. We’ve worked years and I inparticularly have worked 47yrs. Plus we were done over by contracted out in the NHS and BUPA . Plus some of us weren’t informed about change in Retirement age
Pigs might fly!
Expect sensible government policies only when you see them!