The Department for Work and Pensions (DWP) has responded to an enquiry regarding altering the payment frequency of the state pension. Liberal Democrat MP Rachel Gilmour raised a question in Parliament about the possibility of changing the policy to allow monthly payments instead of the current four-weekly instalments.
At present, the full basic state pension stands at £169.50 per week, equating to £678 every payment period, while the full new state pension is £221.20 weekly, resulting in £884.80 per pay period. A shift to monthly payments would mean the full basic state pension averages £734.50 per period, and the full new amount would be approximately £958.50.
Labour pensions minister Emma Reynolds responded to the suggestion of monthly disbursements by saying: “State pension payments are usually paid four weekly in arrears.” She added: “People have the option to be paid weekly or in some circumstances bi-weekly. There are no plans to introduce alternative payment arrangements.”
State pension payouts are set to rise by 4.1 percent in April, following the triple lock policy. This increase will boost the full new state pension to £230.25 a week, while the full basic state pension will go up to £176.45 a week.
The Labour party has pledged to maintain the triple lock on state pensions throughout this parliamentary term. This means that pension payments will continue to increase in line with the highest of 2.5 percent, inflation, or the rise in average earnings.
However, due to the escalating cost of state pensions, numerous experts foresee that the Government will be compelled to revise the metric used to determine these increases in the near future. Steven Cameron, pensions director at wealth firm Aegon, proposes an alternative approach based on the average inflation or earnings growth over a three-year period.
This comes after a record 10.1 percent increase in April 2023 in line with inflation, followed by an 8.5 percent rise the subsequent year using earnings metric. He remarked: “If you averaged it out more, it would become more predictable and it might be more fair across generations.”
Mr Cameron emphasised the importance of retaining the inflation metric to guarantee that pensioners’ payments keep pace with the increasing cost of living.