Millions of retirees are set to receive a larger increase in their state pension than previously anticipated. This adjustment is due to a key factor used in the calculation of the triple lock policy, which ensures that state pension payments rise every April. The triple lock guarantees that the state pension increases annually based on the highest percentage among average earnings growth, inflation rate, or a minimum of 2.5%.
Recent data from the Office for National Statistics (ONS) revealed an upward revision in total wage growth for the quarter ending in July, increasing to 4.8% from the initial estimate of 4.7%. While September’s inflation figures are yet to be released, the most recent data from August showed a lower inflation rate of 3.8% compared to wage growth.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, commented on the revised figures, stating that individuals receiving the state pension can expect a slight increase in their payments starting from April. Those on the full new state pension may see a weekly rise to £241.30 from £241.05, while recipients of the full basic state pension could witness an increase to £184.90 from £184.75.
Currently, the state pension rate is £230.25 per week, and the basic state pension stands at £176.45 per week. The final piece of the triple lock puzzle hinges on upcoming inflation figures, with wage growth likely to be the determining factor given the current inflation rate of 3.8%.
Former Pensions Minister Steve Webb, now a partner at LCP pension consultants, affirmed that both the new state pension and basic state pension are expected to increase by 4.8%. This adjustment would keep the state pension below the income tax threshold for another year, potentially surpassing it in 2027 if allowances do not rise accordingly.
The Labour Party has pledged to uphold the state pension triple lock as outlined in its election manifesto. The new Work and Pensions Secretary, Pat McFadden, reiterated the commitment to maintaining the Triple Lock throughout the current Parliament, projecting a yearly state pension increase of approximately £1,900 by the end of the term. This commitment underscores the party’s dedication to supporting pensioners in the UK.
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