Pensioners set for an 8.5% payment rise next April after figures were confirmed today
Pensioners should see their basic state pension rising to £169.50 a week from next April after the Office for National Statistics (ONS) today confirmed wage inflation for the three months to July was up 8.5%.
Under the government’s triple lock commitment, pensions should therefore increase by:
- £691.60 on the basic state pension taking it to £8,814 a year
- £902.20 on the new state pension taking it to £11,502
The triple lock was introduced in 2010 to ensure pensioners receive an uplift in payments at the same rate of whichever is highest out of earnings, inflation or 2.5%
The triple lock is applied to both the basic (pre-April 2016) and the new state pension (post-April 2016).
It was suspended in the 2022-23 tax year for 12 months. The treasury reintroduced it in November 2022, resulting in state pension income rising by 10.1% from last April, in line with inflation.
However, there’s speculation that the Work and Pensions Secretary Mel Stride could decide to apply ‘regular’ pay instead of ‘total’ pay next April, arguing that the figure has been inflated by big public sector pay rises and spending.
Regular payment for the three months was 7.9% - and choosing to apply it would save the treasury roughly £900 million and affect payments for around 12.5 million pensioners.
A final decision is expected to be announced alongside the benefits uprating review this autumn.
What’s the state pension?
The state pension is a regular payment from the government that most people claim in later life. Men and women are currently entitled to the state pension at the age of 66, but this is scheduled to rise.
State pension comes in two tiers – the basic state pension and new state pension.
Anyone who turned 66 on or after 6 April will receive the new state pension. Anyone born before this time will be on the basic pension.
In 2022/23 pension payments were paid at:
- £156.20 a week for the basic pension
- £203.85 per week for the new state pension
If you claim the state pension, you may also be entitled to pension credit and other associated benefits to top up your income.
What’s the triple lock?
The triple lock is a government guarantee that state pensions grow each year in line with whichever is the highest out of the following three measurements:
- The average growth measured from May to July compared to the previous year
- The consumer prices index (CPI) measured in the year from September
- Or 2.5%
In its 2019 election manifesto, the Conservative party said it would keep the triple lock in place for the duration of this parliament, which ends in 2024.
The triple lock may be even more important to future generations. Younger people are less likely to have the security of financial salary workplace pensions and will be more dependant on other sources of income (including the state pension).
Caroline has worked in financial communications for more than 10 years, writing content on subjects such as pensions, mortgages, loans and credit cards, as well as stockbroking and investment advice.
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