Pensioners could be set for bigger state pension boost than previously thought
Inflation figures for September are due to be released next week, with the most recent figures showing that the rate of CPI inflation was 3.8% in August.
Pensioners are on course for a bigger state pension boost next year than previously thought after a key figure used in the triple lock calculation was revised upwards.
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Office for National Statistics (ONS) data released on Tuesday showed an upwards revision to total wage growth including bonuses for the quarter to July, up to 4.8%, from 4.7% in a previous estimate.
Under the triple lock guarantee, the state pension increases every April in line with whichever is the highest of total earnings growth in the year from May to July of the previous year, Consumer Prices Index (CPI) inflation in September of the previous year, or 2.5%.
Inflation figures for September are due to be released next week, with the most recent figures showing that the rate of CPI inflation was 3.8% in August.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said of the revised figures: “This has consequences for people getting state pension who can expect the amount they get to go up ever so slightly from next April.
“Those on the full new state pension could be on course for £241.30 per week rather than £241.05 while those on the full basic state pension will see their weekly payment rise to £184.90 rather than £184.75.
“Of course we are still waiting for the final piece of the triple lock puzzle to click into place with inflation figures published next week the key figure.
“However, with inflation currently hovering at 3.8% the likelihood is that average wages will be the figure used.”
Many pensioners do not receive the full state pension, with national insurance records counting towards how much people will receive.
Rachel Vahey, head of public policy at AJ Bell, said: “Provided inflation doesn’t spike above 4.8% when the September figures are released next week, all stars point to these latest earnings figures boosting the new state pension to about £241.30 a week, around £12,548 a year from April 2026 – putting it above £12,000 for the first time ever and perilously close to the frozen personal allowance.
“This poses a significant conundrum for Rachel Reeves and the Treasury.
“If, as is likely, the triple lock sees the state pension increase above the personal allowance of £12,570 in April 2027 for the first time, then the Government will come under increasing pressure to make a decision regarding either the personal allowance or whether it can sustain the triple lock as it has promised at least to the end of this Parliament.”
She added: “Removing the freeze on the personal allowance would come at significant cost to the Treasury at a time when the Chancellor’s fiscal headroom is already strained at best, while an overhaul of the triple lock would come with huge political risk before the next general election.”