The annual rate of CPI to September is important because it is the rate used as the basis for increases to many tax allowances and bands, some social security benefits and the state pension. This year’s rate has just been announced to be 2.4%.
With regard to the new state pension and the old basic state pension, the ‘triple lock’ applies which means that the annual increase rate each April is the higher of CPI (annual rate to previous September), the increase in average earnings (usually taken as the Average Weekly Earnings (AWE) three-month average increase ending in the previous July) or 2.5%.
This year these figures are 2.4%, 2.6% and 2.5% respectively meaning that the new state pension and old basic state pension should increase by 2.6% in April 2019 (lower than the 3% increases in the last two years). The increase in earnings definition isn’t set in statute so the government does have discretion there but assuming the same definition is maintained this will be the outcome.
The old additional state pensions (State Second Pension/SERPS) increase in line with CPI so 2.4% this time.
The Lifetime Allowance for 2019/20 will be £1,054,800 after applying the 2.4% increase. Legislation states that the previous Lifetime Allowance will be
(a) increased by the percentage increase in the index (CPI), and
(b) if the result is not a multiple of £100, rounded up to the nearest amount which is such a multiple.
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