Prices rose by 7 per cent a year in March, according to the latest CPI inflation figures released from the Office of National Statistics this morning.
This is the highest inflation rate for 30 years, and is being driven by soaring gas and oil prices. This will further deepen the cost of living squeeze, and is likely to particularly impact pensioners, who saw an annual increase to their state pension of just 3.1 per cent at the start of this week.
XPS Pensions Group actuarial consultant, Tom Birkin says: “The latest record high CPI announcement from the ONS this morning will hit the pockets of UK pensioners hard.
“The UK state pension will increase by just 3.1 per cent in April, less than half of the 7 per cent increase in inflation over the year to March, and well under the 8 per cent that pensioners would have received under the recently suspended triple lock commitment. As energy prices keep soaring and the cost-of-living increases, UK pensioners will continue to be squeezed even further.”
He adds that this latest inflation hike will also impact the funding of many pension schemes.
“Analysis from XPS Pensions’ DB:UK Funding Watch has found that the 0.5 per cent increase in long-term inflation expectations since July 2021 has added £140bn to UK DB scheme liabilities. While this shows that most workplace pensions have some inflation protection in place, annual increases tend to be capped at 5 per cent or lower. So, even though there is some degree of protection for UK pensioners, it will have a limited impact in a high inflation environment that is only expected to get worse before it gets better.”
