The state pension is forecast to hit £13,000 annually for millions of Britons by 2030 if the triple lock is maintained in its current form.
Following last week’s manifesto launches for both the Labour and Conservative Party, the Government has set out what claimants should expect to get from the retirement benefit in the next five years.
Prime Minister Rishi Sunak and Sir Keir Starmer have pledged to keep the state pension triple lock going into the next Parliament.
Under this metric, pension payments are raised every year by either the rate of consumer price index (CPI) inflation, average earnings or 2.5 per cent; whichever is highest.
In April, the full new state pension was increased by 8.5 per cent which means claimants receive £221.32 a week or £11,540 a year.
Before voters head to the polls, the Tories have shared by how much peoples’ pensions will go up by under their watch.
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Sunak and Starmer have both promised to keep the state pension triple lock in place
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Here is a breakdown of the upcoming triple lock rises, based on Conservative Party forecasts:
- 2025/26 tax year – £229.50 a week/£11,970 annually
- 2026/27 tax year – £235.24 a week/£12,269 annually
- 2027/28 tax year – £241.12 a week/£12,576 annually
- 2028/29 tax year – £247.15 a week/£12,890 annually
2029/30 tax year – £253.33 a week/£13,200 annually.
Steven Cameron, Aegon’s pensions director, outlined what the Conservatives’ forecasts are based on and what pensioners should expect in the years to come.
He explained: “For next April, they predict a £430 increase from £11,540 to £11,970, equal to 3.7 per cent. Given the announcement that inflation sat at two per cent for May, it’s very likely the triple lock will be based on earnings growth.
“This currently stands at 5.9 per cent, but it’s the figure published in September which is used, and the implied manifesto expectation is this will fall to 3.7 per cent by then.
“The Conservatives also predict the state pension will have risen to £13,200 in five years’ time, come 2029/30. While not specified in their manifesto, Aegon calculations show that this means they are assuming the minimum 2.5 per cent increase in the following four years.
“In other words, current forecasts are that both inflation and earnings growth will not exceed the 2.5 per cent per year guaranteed increase over this period.
“These figures are based on the assumption that inflation will remain at or below 2.5 per cent throughout this period.
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Earlier this year, the state pension has increased by 8.5 per cent in line with the triple lock
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“And while the increases are far below the bumper boosts of 10.1 per cent and 8.7 per cent in April 2023 and 2024 respectively, when inflation and earnings growth were skyrocketing due to exceptional circumstances, this return to more typical triple lock increases will still allow state pensioners to at least retain their purchasing power.”
Furthermore, the Tories have floated introducing the “triple lock plus” if the party remains in power in an attempt to woo older voters.
Under this proposal, the tax-free allowance for pensions would be raised which means millions of Britons would not pay tax on their state pension alone.
However, Labour has ruled out introducing this tax saving measure if they return to Government.