UK Pension Triple Lock

The UK state pension is also raised each year by at least 2% higher than inflation…

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Actually not. It’s the higher of inflation, average wage increase or 2.5%. So over the last couple of years it’s been at the inflation rate.

Actually yes it is. My UK State Pension was increased by 10.1% in April 2023 over the 2022 year. This year they advise that it will increase by 7.8% in April 2024.

Of course, as it is paid here in CHF, the increases lost a little in currency exchanges…

It’s raised in accordance with the triple lock: inflation (CPI), average wage increase or 2.5%. Whichever is higher that year.

The mistake with the triple lock is that it assessed it each year on a year by year basis. They should have kept a cumulative calculation under each basis and applied the highest cumulative one.

Unfortunately, the first 2 can be inter-related with timing differences so you can end up with double-counting or over-compensating e.g. an impulsive increase in inflation in once year then feeds through to wage increases in the next.

The increase is based on the inflation/wage rate as of September in the previous year. UK inflation in September 2022 was 10.1%, hence the increase in April 2023. The 2024 increase is due to the increase in wages to September 2024 (I found 8%, guess this was corrected downward somewhen). So no 2% above…

Triple lock was also temporarily suspended at some point to avoid the covid craziness from having an outsized effect.

Just got my letter about the increase, I expected 8.5% but it was nearer 12%. I am not complaining, I just wonder how they calculate it.

Question: Is tax deducted at source in the UK on the UK state pension paid into Switzterland?

No they cannot deduct tax, if you have another company pension or income then they will deduct the tax

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A countries inflation rate is inversely related to its currency exchange rate. There are other factors so it is not one to one but it is reasonable to expect one’s UK pension after inflation increases will be constant in CHF or show a small increase.

Figured it out.
Part of my company pension is UK Guaranteed Minimum Pension earned before 1988. The inflation increase on that is added to my UK State Pension.

My lovely bride just qualified for her British pension. £40 a week! She is plesantly surprised as she left England in her early 20s.

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Did they contact her to give the pension or did she have to go and check? If she had continued to pay voluntary class 2 NICs each year (at only <=£3.45 per week), she could have been eligible for a full UK state pension!

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She checked last year and was told it was too soon. So she checked again after her birthday. She didn’t make any contributions after leaving in the early ‘80s.

She could still pay the last 6 years worth which would boost her pension a bit.

Likely get better returns investing such funds elsewhere. £40 isn’t even her hubby’s beer money …

£40 per week is still better than a kick in the teeth!

Agree, but after exchange rate and taxes, diminishing returns.

Just saying that topping up her contributions likely won’t be a wise investment.

Isn’t the full UK state pension only around £220 per week, so £40 is a fair chunk of that. Obviously with higher living costs in CH, it doesn’t get you so far.

Yah, we have no idea how they did their calculations, but our initial thought is that it is generous.

I’m sure if they made a mistake they will let us know.