The new full state pension will only cover a quarter of the income required in retirement, as it will amount to £9,628 from April 11.
Sir Steve Webb, former pensions minister and now LCP, said: ‘The very small increase in state pensions means pensioners will have to dip deep into their savings if they are to protect their standard of living this year. This clearly increases the risk that people will run out of money now or later in retirement.
Richard Eagling, of comparison website NerdWallet, said a further 200,000 people of retirement age fell into relative poverty last year and many more face financial ruin because the pension of the state has not kept pace with prices.
This month’s £693 rise in annual energy bills alone will cost the equivalent of a whole month’s average government pension payment, according to figures from the Department for Work and Pensions.
Mr Eagling added: ‘Any increase in the state pension this year will do little to offset the cost of living crisis that many pensioners are facing. We can expect this situation to deteriorate further.
The new state pension will rise by £5.55 a week to £185.15, while the basic state pension, received by those who retired before 2016, will rise by £4.27 a week to reach £141.85. The state pension is paid to 12 million over the age of 67. This government broke its promise on the triple lock to increase profits at the height of inflation, profit growth or 2%. In September, when the DWP made its decision, inflation was only 3.1% but earnings growth was 8.1%.
The Treasury will save £10billion in the 2022-23 tax year by ignoring the income link. Meanwhile, the tax authorities expect to receive £800m more each year as pensioners withdraw more money from their private savings, according to the Office for Budget Responsibility, a tax watchdog. expenses.