State Pensions are expected to rise by 8.5 per cent in April 2024 in line with rocketing wage growth.
The Triple Lock policy means the increase in the State Pension is set at the highest of average earnings, inflation or 2.5 per cent.
The latest statistics from the ONS recorded growth of average earnings – total pay including bonuses - at 8.5 per cent between May and July. As inflation is unlikely to be higher, the State Pension is therefore expected to rise in line with average earnings.
Annual rise of more than £900 for some
Basing the Triple Lock on these figures would see the new State Pension rise from £203.85 to £221.20 per week. The basic State Pension would increase from £156.20 to £169.50 per week.
The expected hike will follow on from the record 10.1 per cent increase rolled out in April 2023.
‘Headache for the Government’
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “We always thought inflation would be the key factor when it came to the Triple Lock, but soaring wages look set to outstrip it, with annual wage growth of 8.5 per cent.
“This has the potential of delivering a bumper state pension increase next year.
“Inflation has proved unpredictable and could rise again ahead of next month, but with it currently standing at 6.8 per cent it would need to be a truly enormous rise to outstrip what we are seeing here.”
The sustainability of the Triple Lock is under scrutiny due to the cost it poses to taxpayers. Research from the Institute of Fiscal Studies found that maintaining the Triple Lock could add as much as £45bn to the welfare bill by 2050.
Ms Morrissey said: “Such an increase will be welcomed by pensioners, who have gone through difficult times this year as the cost of living continues to lay waste to our finances.
“However, it will continue to be a headache for the UK Government who need to battle the ever-spiralling cost of the State Pension bill.”
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