Important information: The value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

THERE will have been muted cheers when the government last week announced a 3.1% rise in the State Pension for next year.

Pensioners will see their weekly payment rise from £179.60 to £185.15 a week from April 11 but the celebrations will be short because the rise falls well below the level that was due to be applied. The ‘triple lock’ had been due to increase the State Pension by whatever was highest of the rise in wages, the rise in CPI inflation or 2.5%, which this year would’ve meant pensions rising in line with wages which were growing at a punchy 8.3% in September when the reading was taken.

Had that raise been implemented as planned, the State Pension would rise to £194.50 a week in 2022.

This will not happen, however, after the government intervened to abandon the triple lock this year. Its justification does have merit but will still be tough to swallow for pensioners who - like the rest of us - are seeing their living costs rise substantially. The government argues the wages figure is artificially high due to the pandemic. In particular, many low-paying jobs were lost at the start of lockdown and this pushed the average higher. Meanwhile, the end of the furlough scheme also produced a spike in the statistics.

The 3.1% rise pensioners will get instead, however, has already been made to look small by the fact that inflation has now risen again - to 4.2% in October - and is expected to rise further in the coming months.

To those still many years away from claiming their own State Pension these arguments may seem unimportant, but there’s good reason why we should all care about the value of the benefit.

The State Pension makes up an important part of retirement income for almost everyone, even the relatively wealthy, because it is income that is guaranteed and uprated by at least the rate of inflation every year. The State Pension is often what retirees rely on to know that their essential bills will be covered even if other sources of income are uncertain and prices rise.

Guaranteed, inflation-proof income is expensive to replicate in other ways. For those with savings held inside pensions, the only option is to purchase an annuity which is inflation-linked and, based on current annuity rates, it would take a savings pot of £337,000 just to replicate the maximum annual income from the state pension of £9,339. That’s based on a healthy 65-year-old purchasing an annuity that lasts for life and is uprated with Retail Price Index (RPI) inflation.

Ensuring you are entitled to the maximum State Pension possibility, therefore, is vital. To get the full State Pension you’ll need 35 years of National Insurance Contributions. If you have less than this your pension is worked out pro-rata - so someone hitting their State Pension age now would divide £179.60 by 35, then times that by the number of years they’ve contributed.

You can check how many years you’ve amassed online through the government service, here.

Important information: Investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. The minimum age you can normally access your pension savings is currently 55, and is due to rise to 57 on 6 April 2028, unless you have a lower protected pension age. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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