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Millions of state pensioners could see their payments increase significantly next year under the triple lock, experts have predicted.
In April this year, state pension payments rose by 10.1 percent as a result of high inflation.
Although next year’s increase may not be as high, pensioners can still end up with over £800 more under the triple lock.
Under the triple lock, state pension payments will increase by either 2.5 percent, in line with average earnings, or prices as measured by the Consumer Price Index (CPI) – whichever is highest.
It was previously thought that CPI inflation rate would be the driving factor behind the April 2024 increase, with a rate of 6.8 percent for the 12 months leading up to August.
However, from April to June 2023, annual growth in employees’ average total pay, including bonuses, was 8.2 percent.
If the earnings growth figure announced this month stays at this level, this will guarantee people on State Pension an 8.2 percent increase on their payments next April – even if inflation continues to fall.
This would mean an extra £16.72 a week for those on the full State Pension, working out at £869.44 more a year.
Previously, Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Next month’s average wage figure is the one to keep an eye out for and we then have to wait until the September inflation figure is published in October before we know what the State Pension under the Triple Lock will be.
“We may not see the eye-wateringly high increase in State Pension that we saw last year (10.1 percent) but something in the region of seven percent is not out of the question.
“This would push up the full New State Pension to more than £11,300 per year – if we were to see an increase in the region of 8.2 percent, it would go up to around £11,470.”
The latest predictions suggest inflation will be at 6.9 percent in September so if the average earnings figure remains higher, this may end up determining how much payments increase next year.
Here is how much the weekly state pension would increase to with a seven percent or an 8.2 percent increase:
Seven percent increase
Full new state pension: £218.11
Full basic state pension: £167.13
8.2 percent increase
Full new state pension: £220.57
Full basic state pension: £169.
Ms Morrisey added: “This would be welcomed by pensioners who have been battling rising costs but adds to the woes of the UK Government trying to find a way to tame spiralling State Pension costs.
“As the system continues to creak under pressure it’s time for a review of how the State Pension works and the Triple Lock’s role within it.”
The amount you will receive when you reach State Pension age depends on your National Insurance record, with the full rate currently standing at £203.85 per week or £10,600 a year.
“If you reached State Pension age before April 6, 2016, you will get a different amount under the basic State Pension rules.”
