More than 13 million people rely on the state pension.
Millions of pensioners are set to receive a larger-than-expected increase to their state pension next year, with the triple lock delivering a rise worth hundreds of pounds from April. The change will mean retirees receive up to £120 more than they would have if payments had risen in line with inflation alone. More than 13 million people rely on the state pension, and the latest figures show the increase will be driven by one specific part of the triple lock – earnings growth.
Under the rules, payments rise each year by the highest of average wage growth, September inflation, or 2.5%. This year, wage growth came in at 4.8%, higher than both inflation (3.8%) and the 2.5% minimum. That means the earnings element of the triple lock is responsible for pushing the pension up further than expected, giving retirees a bigger boost than an inflation-linked rise would have provided.
For those on the full new state pension, the 4.8% increase is worth £574.60 a year (Image: Getty)
For those on the full new state pension, paid to people who reached state pension age after April 2016, the 4.8% increase is worth £574.60 a year, taking the total payment to £12,547.60.
By comparison, an inflation-only rise would have been more than £120 lower.
Anyone on the older basic state pension will also receive a 4.8% uplift, although the final amount is smaller because the basic pension is set at a lower weekly rate.
It will rise from £176.45 to around £184.92 per week, worth an extra £440.41 a year.
Those increases will be formally confirmed at the Budget on November 26, when Chancellor Rachel Reeves outlines next year’s tax and spending plans.
The Chancellor previously said: “Whether it’s our commitment to the triple lock or to rebuilding our NHS to cut waiting lists, we’re supporting pensioners to give them the security in retirement they deserve.”
Government figures show the earnings-driven rise means pensioners will be significantly better off next year, even as other departments prepare for spending cuts.
Treasury documents also confirm that the increase is £120 higher than an inflation-based uplift, The Telegraph reported.
The improvement comes despite warnings that the triple lock is becoming increasingly costly.
The Office for Budget Responsibility says the policy is already costing three times more than originally forecast and could reach £15.5 billion a year by 2030.
The new state pension total of £12,547.60 will leave retirees barely £22 below the tax threshold (Image: Getty)
The International Monetary Fund has urged the Government to consider scrapping it, calling it one of the “difficult decisions” needed to stabilise the public finances.
There are also concerns that the higher payments will bring more pensioners into the income tax system.
With the personal allowance frozen at £12,570, the new state pension total of £12,547.60 will leave retirees barely £22 below the tax threshold.
Analysts say this could pull around 200,000 more pensioners into paying income tax, unless tax bands are changed at the Budget.
Despite the pressures, ministers insist the triple lock remains a priority. The Government argues that pensions must keep pace with living costs and wages, especially as many older people rely on the state pension as their main source of income.
