Millions of pensioners could see their state pension payments rise by £517 a year next year.
It comes after the Labour Government confirmed that it would retain the triple lock during their election campaign.
Under the triple lock, the state pension increases each year wither in line with inflation for the previous September, the average increase in wages across the UK or 2.5 per cent, whichever is higher.
Latest figures from the Office for National Statistics (ONS) have shown that annual growth in total earnings, including bonuses, stood at 4.5 per cent in June.
This is down from 5.7 per cent last month and is affected by the payment of one-off bonuses in NHS last year.
This figure is still far higher than inflation or 2.5 per cent making it likely wages will be the figure taken for state pension uprating using the triple lock.
The full state pension could rise by around £517 a year if wage growth remains at 4.5 per cent
GETTY
This means that in April 2025, the full state pension could rise by around £517 a year if wage growth remains at 4.5 per cent when July’s annual growth figures are announced next month.
Earnings growth figures released in September will be used to determine the uprating as long as it is higher than the inflation figure in September.
Helen Morrissey, Head of Retirement Analysis, Hargreaves Lansdown: “Wage growth remains robust, so it’s highly likely that next month’s figure will be the one used to uprate state pension under the triple lock.
“This month’s figure comes in at 4.5 per cent – way down on last month’s 5.7 per cent, but it has been affected by the payment of one-off bonuses in the NHS last year.
“If the figure were to remain the same next month, then we could see the full new state pension get a boost of around £517 – taking it to approx. £12, 019 per year.
“Such a rise will be welcomed by pensioners still emerging from the cost-of-living crisis. However, with many still reeling from the news that their Winter Fuel payment is to be taken away, it won’t be quite the boost that many hoped for.”
Currently, the full new state pension is £221.20 a week – or £11,502.40 a year.
This is given to those who reach state pension age after April 6, 2016.
Under the old system, the full basic state pension is £169.50 per week or £8,814 a year, and it is paid to those who retired before April 6, 2016.
Morrissey explained there’s another looming challenge for pensioners when it comes to the amount they receive – frozen tax thresholds.
The frozen thresholds mean that the full new state pension is creeping ever closer to tax-paying territory and a similar rise next year could see it surpass it.
She continued: “With these freezes in place until 2028, there’s every chance, we could see pensioners solely reliant on the state pension finding part of it is making its way to the taxman.
“In terms of the working population, economic inactivity due to long-term sickness remains a huge concern. This spans all age groups but the majority of those affected are in the 50-64 age group.
“Being unable to work during this period can have catastrophic effects on people’s ability to prepare for a decent retirement, as well as managing day-to-day.
“The latest data from the HL Savings and Resilience Barometer shows only 38 per cent of households are currently on track for a moderate retirement income so there is already a mountain to climb.
“How to deal with the impact of long-term illness on the workforce will be a major challenge facing the new Labour Government.”