Pensions could be outpaced by price rises, according to research

Pensioners in Cheshire could stand to lose tens of millions of pounds in real terms next year as the cost of living soars.

That’s according to analysis by the Liberal Democrats, who want to ensure a fair increase to the state pension so those relying on the payment are not “left out in the cold”.

The state pension is set to rise by 3.1 per cent from next April – in line with the inflation figure recently published by the Office for National Statistics.

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But some experts predict inflation – a measure of the rise in the price of goods and services – could be around double that by next year due to factors including surging energy prices and the supply chain crisis.

The Basic State Pension will increase from £137.60 to £141.85 per week, if the Government pushes ahead with the 3.1 per cent rise.

But House of Commons Library research commissioned by the Lib Dems suggests a 6 per cent increase would see it go up to £145.85 per week.

If pensioners got the lower amount, that would leave them short by £4 per week – or £208 per year – in real terms.

At the end of February, there were 213,140 people across Cheshire receiving the state pension – the latest Department for Work and Pensions figures show.

They would collectively be £44.3 million worse off over 2022-23 in real terms, according to the Lib Dems.

The figure is an estimate as not all people in the area will claim the Basic State Pension, though some on the New State Pension would lose out by more, the party said.

Across Great Britain, 12.4 million people were receiving the state pension at the end of February.

Assuming they all got at least the basic pension, the total hit would be £2.6 billion next year.

The Lib Dems estimate that £323 million of that would be taken from the 1.5 million elderly people on lower incomes who get Pension Credit.

Earlier this year, the Government suspended the so-called “triple lock” on pensions after having pledged to protect it in The Tories last election manifesto.

This rule saw it rise by whatever was highest out of inflation as measured by the Consumer Price Index (CPI), the average increase in wages, or 2.5 per cent.

But ministers suspended the use of the wage measure for 2022-23 as thousands of workers coming off furlough caused earnings to rise by more than 8 per cent on average.

Liberal Democrat work and pensions spokesperson Wendy Chamberlain claimed: “The Conservatives have broken their manifesto promise to protect the state pension and are failing to tackle the cost of living crisis.

“This is striking a double blow to pensioners, who face being left hundreds of pounds poorer as their pension payments fail to keep up with soaring bills.

“The Liberal Democrats are demanding a fair increase to the state pension, so that it matches rising living costs instead of leaving pensioners out in the cold.

“We know that pensioners are typically more vulnerable to increased energy bills, as they tend to spend more time at home especially in the winter months.

“Older people deserve a fair deal in which their pensions are protected and they can afford to keep their homes warm.”

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The party has tabled an amendment to the Social Security Bill to ensure the state pension rises with the inflation figure for April 2022.

Concerns about higher-than-expected inflation emerged in early October when financial markets forecast UK rates according to the Retail Price Index (RPI) could reach around 7 per cent by next April, driven by the rise in energy prices.

The CPI measure of inflation – used to calculate pensions – generally averages at around one percentage point less than RPI.

And last week, the Bank of England’s chief economist Huw Pill said inflation could go “close to or above 5 per cent” in the coming months.

Thérèse Coffey, the Secretary of State for Work and Pensions, is due to carry out the annual review of benefit and pension rates, the outcome of which will be confirmed later this year.

A Government spokesperson said: “We’re committed to ensuring older people are able to live with the dignity and respect they deserve, and later this year we will confirm the new rate for state pensions.

“The one-off decision to temporarily suspend the triple lock ensures fairness for both pensioners and taxpayers – while also protecting pensioners’ incomes.”

Cheshire Live – Cheshire