It is likely the full state pension will rise by £460 next April as ONS figures show a rise of four per cent in UK average earnings.
ONS figures showed total wage growth increased by 4% in the three months to July,
It comes after reports last week predicting the boost to pensions was expected and suggesting the triple lock would be uplifted by average earnings and therefore boost the state pension above inflation next year.
Today’s figures alongside subdued inflation suggest the uplift is more than likely under the triple lock guarantee, which ensures that the state pension increases every April by the highest of inflation, average wage increase, or 2.5 per cent.
This means from April next year the ‘new’ state pension would increase from £221.20 per week (£11,502 per year) to £230.05 per week (£11,963 per year).
While the ‘old’ state pension would increase from £169.50 per week (£8,814 per year) to £176.30 per week (£9,168 per year).
Rachel Vahey, head of public policy at AJ Bell, thought the government’s promise to stick to the triple lock may redeem it in the eye’s of pensioners after it received criticism for axing the winter fuel payment.
She said: “The government is coming under more intense pressure to ‘u-turn’ on its controversial decision to axe the winter fuel payment for all pensioners, except those who claim pension credit. And although the increase to the state pension should help meet next year’s bills, it doesn’t help those who will be living close to the edge of their means this winter.”
Andrew Tully, technical services director at Nucleus said pension boost would be partially offset for some pensions who are losing the £200-£300 winter fuel payment.
“While the headline state pension increases by the triple lock, other parts of the state pension such as SERPS/S2P, the graduated pension, protected payments and benefits for deferring, will go up by the lower CPI figure which will be confirmed in October," he said.
“This increase pushes the headline state pension figure closer to the frozen personal allowance of £12,570, making it likely more pensioners solely in receipt of the state pension will start to pay income tax. This brings the interaction of state pensions, the triple lock, means-tested benefits, and personal tax allowances sharply into focus.”
Jon Greer, head of retirement policy at Quilter, believed the challenge for Labour was ensuring the state pension remains fair and adequate without widening the generational divide.
He explained: “With income tax thresholds frozen, some pensioners relying solely on the state pension may soon be in the absurd position of needing to pay a portion of it back in income tax. Pensioners receiving the full new state pension now only need an extra income of £607 a year before their personal allowance is used up in full.
“As the government’s upcoming pension review examines the adequacy of both state and private pensions, this could be the moment for a balanced, long-term strategy that aims to get cross-party support.
