14 Sep State pension to see over £900 annual increase – what to do with extra funds
Latest reports from the Office for National Statistics reveals that the pay growth has caught up with rising prices for the first time in nearly two years.
The official figures demonstrate that the pay growth has risen by 7.8% in May to July compared with a year earlier, meeting the pace of inflation over the same period.
As such, state pensions are set to rise by 8.5%, which would result in a weekly increase of £13.30 and an annual increase of £691.60 on the basic state pension.
For those receiving the new flat-rate pension, which is people who revealed state pension age after April 2016, the rise is set to be £17.35 a week, or £902.20 a year.
Overall, this means that as well as Brits seeing more spare cash thanks to increased pay in comparison to price rises, there will also be extra funds in their pensions.
Lucinda O’Brien, expert at money.co.uk savings accounts, said: “It’s good news to see pay growth has finally caught up with price rises for the first time in almost two years. Not only does this mean Brits should see more spare cash in the coming months, but also pensions are set to increase.
“This means Brits who are willing to play the long game have more opportunity to build a healthy retirement fund.
“Depending on your financial position, opening a savings account to earn extra on your newfound spare cash could be a great way to prepare for post-work life. Those who don’t have too much spare money should look into an easy access savings account, which allows users to withdraw money whenever they need to.
“Currently Santander’s Easy Access Saver Limited Edition (5.20% until September 17) and cahoot Simple Saver (4.90%) offer some of the best interest rates and can be opened with just £1.
“Alternatively, savvy savers can opt for a fixed-rate bond, which offers a guaranteed amount of interest on terms from nine months to five years. Currently, Raisin UK Ahli United Bank 1-year fixed term and the My Community Bank 3-year fixed term offer the best interest rates at 6.1% and 6.08% respectively. Both accounts can be opened with £1,000, yet no withdrawals can be made in this time period.
“Another option is a cash ISA which allows savers to get tax-free interest on their savings. Cynergy Bank Online ISA (Issue 41) offers one of the best interest rates currently at 4.55%, and it can be opened with just £1 and easy access withdrawals 24/7.”
For more information and guidance on saving, including the best savings rates available today, visit: https://www.money.co.uk/savings-accounts
