DWP alert over £9320 state pension 'payment gap' as MP suggests ...

The DWP has set out its stance regarding the state pension after a question about a growing discrepancy in payments. Conservative MP Gregory Stafford queried the Government on measures being taken to "reduce the difference between the minimum wage and the state pension".

Currently, the full new state pension stands at £221.20 per week, which amounts to an annual total of £11,502.40. In contrast, the National Living Wage for those aged 21 and above—the legal minimum for employers—is at £11.44 per hour, totalling £20,820.80 annually for a full-time workload of 35 hours per week.

This indicates that the National Living Wage surpasses the full new state pension by £9,318 each year. This gap will widen from April, with state pension payments set to increase by 4.1% due to the triple lock, whereas the National Living Wage will see a rise of 6.75%.

With the revision of the rates, the full new state pension will reach £230.25 weekly, or £11,973 yearly, while the National Living Wage will advance to £12.21 hourly, equating to £22,222.20 annually for full-time workers—meaning almost a £10,250 annual difference.

In response to the issue, Treasury minister Darren Jones set out that the state pension as "the foundation of state support for older people". He stressed the importance of people financially preparing for retirement, underlining that "to ensure financial security in later life, individuals are expected to save for their retirement".

He went on to say that the Government "is committed" to the triple lock for the duration of this Parliament. The policy ensures that the state pension rises in accordance with the highest of 2.5%, the average earnings increase or inflation. This measure has resulted in substantial increases to the state pension in recent years, including an 8.5% uplift last year in line with earnings, and a record 10.1% surge in April 2023 due to skyrocketing inflation.

Mr Jones also said that the Government "provides generous pensions tax relief to enable savings". Workers receive 20% tax relief on pension contributions, meaning for a workplace pension, the pension provider reclaims this amount from the Government when contributing to your pension.

The minister further stated: "Over the course of this Parliament, the yearly amount of the full new state pension is currently forecast to go up by around £1,900, based on the Office for Budget Responsibility's latest forecast." State pension payments are set to rise by 4.1% this April using the earnings component of the triple lock, prompting experts to speculate whether it will increase next year in line with either earnings or inflation.

Mike Stimpson, partner at wealth management firm Saltus, noted that predicting the key figure is challenging as the economic landscape "remains uncertain" for the upcoming months. He commented to say: "The combination of the base rate cut, falling job vacancies, and weak growth forecasts presents a mixed picture for wage growth.

"However, the latest data suggests that wages may be keeping pace with or even exceeding inflation, which could influence the triple lock decision."