State pensioners could get £600 a month boost with triple lock binned under radical policy | Personal Finance | Finance

State pensioners could get a huge £600 a month boost to their payments under a radical new policy.

A finance expert has said one option the future Government could look at is providing a “significant one-time increase” to align the UK’s state pension with top-paying European countries.

Daniel Abbot, independent financial advisor and chartered accountant at Hoxton Capital Management, told “In terms of economic stability and standard of living, I would compare the UK most closely to France.

“As such, to be comparable with the French state pension, the UK would need to increase its by around £600 per month (63 percent).”

The future of the state pension is under the spotlight this week after Conservatives put forward plans to increase the personal allowance for pensioners in line with the triple lock.

Mr Abbot said providing a large one-time boost would allow for the triple lock to be scrapped and replaced with a single metric for the increase linked to the rise in living costs.

A £600 a month increase to the state pension would increase the full new state pension from the current £221.20 a week to almost £360 a week.

But the accountant said the Government would struggle to find the cash for such a colossal single increase.

He explained: “That is quite a large hit to take in one go for budgetary purposes though so it would be very unlikely.

“After that, annual increases in line with inflation would see the state pension as a percentage of the cost of living remain consistent.”
He said: “The state pension is primarily funded by National Insurance contributions from the current year, which are directly linked to earnings.

“Therefore, when the highest of the three measures (2.5 per cent, wage growth, or inflation) is not wage growth, the amount paid out increases at a higher rate than the amount collected.

“Despite this, when compared to other European countries, the UK state pension is relatively low as a percentage of the average cost of living.

“The UK is currently ranked outside the top 10 countries, which include Luxembourg, Spain, and Belgium.”

Luxemboroug is by far the most generous state pension provider, with retirees in the small country getting on average €6,095.87 a month (£5,211.20), according to figures from Almond Financial.

An increase to this top amount would see UK state pensioners get £62,534.40 a year, almost twice the average worker salary.

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