The state pension will rise with the triple local from 10 April 2017 and some other benefits will increase by 1%, the Government announced on 28 November.
Inflation hit 1% in September (CPI) and the revised rise in earnings May to July (KAC3) was 2.4%. benefits and pensions will be uprated by four different rates from Monday 10 April 2017. The rates will be 0%, 1%, 2.4%, and 2.5%. All amounts are rounded to 5p or 1p so may be slightly more or less than the stated rate of increase.
Frozen
Some benefits will be frozen. The Summer Budget 2015 listed the working age benefits that would be frozen for four years from 2016/17 to 2019/20. They are
- Child Benefit
- Jobseekers’ Allowance
- Employment and Support Allowance
- Income Support
- Housing Benefit under women’s state pension age
- Local Housing Allowance rates
- Child Tax Credit
- Working Tax Credit
- Universal Credit (but the taper will be reduced from 65% to 63% which will mean a slight rise in benefits for those at work.
Any disability premiums or extras paid with any of these benefits will NOT be frozen. They will rise by 1%.
It is likely that in England council tax support, paid by local authorities, will also be frozen for people under women’s state pension age. In addition some English councils will cut the amounts paid to people further as they try to balance their books. In Scotland and Wales that will probably not be true.
Women’s state pension age at April 2017 will be 63 years and 9 month rising to 64 and 6 months by March 2018.
Other benefits including Universal Credit, tax credits, Housing Benefit, and council tax support will also be cut for some of those with children.
Rise by 1%
Benefits which are not frozen will rise by the rate of CPI inflation for September 2016 which was 1%.
They include
- Attendance Allowance - up by 80p to £83.10 a week for higher rate and 55p to £55.65 a week for lower rate
- Personal Independence Payment - will remain the same as Attendance Allowance and rise by 80p to £83.10 a week for higher rate and 55p to £55.65 a week for lower rate
- Disability Living Allowance - up by 80p, 55p, or 20p to £22 a week for lowest rate
- Carer’s Allowance - up by 60p to £62.70 a week
- Bereavement Allowance - up by £1.15 to £113.70 a week
- Maternity Allowance - up by £1.40 to £140.98 a week
- Statutory Maternity/Paternity/Adoption/Shared Parental Pay will be the same as Maternity Allowance
- Statutory Sick Pay - up by 90p a week to £89.35.
- All parts of the state pension which are NOT Basic State Pension or the full New State Pension. Details below.
Employment and Support Allowance falls partly under frozen benefits and partly under benefits that will be raised by 1%. The basic ESA of £73.10 a week is frozen. The extra paid to those who cannot work - the support component - will rise by 35p a week, an increase of 0.3%.
The 1% rise in April 2017 is well below the expected rate of inflation then which is forecast to be around 2% and to rise to 2.6% later in the year.
The 1% rise in April 2017 is well below the expected rate of inflation then which is forecast to be around 2% and to rise to 2.6% later in the year.
Rise of 2.5%
The basic state pension and the new state pension will rise by 2.5%. They are covered by the so-called triple lock which guarantees an increase in line with prices measured by the Consumer Prices Index, earnings, or 2.5% whichever is the highest. CPI was 1%, earnings rose by 2.4%, so they will increase by 2.5%.
That will mean
- a rise in the basic pension of £3.00 from £119.30 to £122.30
- a rise in the full new State Pension of £3.90 to £159.55.
Any amount of the new State Pension which was above £155.65 in 2016/17 will also rise by only 1%.
It is worth noting that the Triple Lock only adds 15p a week to the state pension rise. The law currently provides for it to rise by the increase in earnings, That was 2.4% and would have resulted, after rounding, in a basic state pension of £122.15 and a new state pension of £159.40.
Rise by a different amount
Pension Credit is an anomaly in the benefit system. There are two parts to it.
- Guarantee credit paid to men and women who are aged from women’s state pension age to 65.The standard minimum guarantee credit will rise 2.4% in line with earnings. The rate for a single person will increase by £3.75 to £159.35 a week and by £5.70 to £243.25 a week.
- Savings credit paid to men and women aged 65 or more who reached state pension age before 6 April 2016. Savings credit is NOT paid to anyone who reached state pension age from that date. The savings credit will rise by around 2.6% and the threshold at which it ends will rise by just 1% to £13.20 and £14.90.
The overall effect of the rise in the state pension and in pension credit will mean that people on pension credit will see a rise in their overall income of £3.75 (single) or £5.70 (couple) for the poorest 1.1 million who get no savings credit. For the 1.2 million who do get savings credit the rise will be £3.43 (single) or £5.31 (couple) for most of them. For many that will be a percentage rise of less than 2%.
Compared with April 2016
In April 2016 all benefits except the state pension were frozen. Some by the decision announced in the Summer 2015 Budget and others because CPI inflation in September 2015 was -0.1% which led to a zero rise. So for those on working age benefits that are increasing in April 2017 it will be their first rise for two years.
The basic state pension rose by 2.9% in line with earnings. That £3.35 increase was more than the £3.00 due in April 2017. The extras paid with the basic state pension were frozen.
Benefit Rates 2017/18
vs 1.10
28 November 2016
Benefit Rates 2017/18
vs 1.10
28 November 2016
