Pensioners are on course for £600 a year increase in the State Pension – taking it up to 12,100 – from next April under the Triple Lock pledge.
Finance industry experts suggest the figure is set to rise in line with wages, which are increasing at an annual figure of 5.7 percent, according to official data published today.
That increase would be above the current rate of inflation, which is running at 2 percent, and means that pensioners should see an improvement in living standards.
The increase is linked to the so-called Triple Lock, which guarantees the State Pension should rise in line with the highest figure looking at three measures – the CPI measure of inflation, a figure of 2.5 percent or wages growth.
The wages growth figure used for the calculation is for the month of September, which finance industry experts expect will be around the same as the current figure of 5.7 percent.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Inflation may be on the wane but wage growth remains red hot coming in at 5.7 percent.
“This makes it highly likely that wage growth will be used to uprate the state pension from April next year – the figure to watch will be published in September. If it remains at a similar level, we would see the full new state pension rise to more than £12,100 per year.”
She added: “Such a rise would be welcomed by pensioners who have been buffeted by the cost-of-living crisis.
“It may not be on the scale of increases given in the past, but it will still make a sizeable difference to people’s day-to-day spending.”
In recent years, surging CPI inflation, largely caused by Russia‘s invasion of Ukraine and its impact on energy, fuel and food prices, has set the benchmark for pension increases.
This delivered an increase in pensions of 10.1 percent in April 2022, which was followed by another big increase of 8.5 percent in April this year.
The relatively big increases in the State Pension in recent years have triggered suggestions a new Labour government might be forced to abandon the Triple Lock pledge or introduce some sort of means testing. This has been denied by the party.
The Chancellor, Rachel Reeves, has signalled plans for a pensions review, but it is thought this will focus on private and workplace pensions rather than the State Pension.
Helen Morrisey said: “It remains to be seen if State Pension will form part of the government’s pension review. With a burgeoning pensioner population, the state pension costs are rising, and the government will want to manage this and there is only so far, they can go when it comes to raising state pension age.
“An overarching review is needed to put the State Pension on a long-term sustainable footing so people have certainty over what they will get and when.”