State pensioners are on track to receive an additional £514.80 next year, according to the latest official figures. The data used to determine the annual triple lock increase will be released next month.
The triple lock guarantees an increase to the state pension in line with inflation, wage growth or 2.5%, whichever is highest. Wage growth appears set to be the highest this year.
Wage growth data
In the three months from April, wage growth was 4.1% higher than the same period last year, according to figures released today by the Office for National Statistics. That outstrips the current rate of inflation, 2.9%, considerably. The Bank of England expects inflation will not rise above 3.2% this year.
If next month’s statistics show wage growth continued at the 4.1% rate to July, state pensioners would receive £514.80 more than last year, taking the annual total to £13,062.40. That figure would change if wage growth drops suddenly or inflation rises sharply before September.
Expert analysis
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Average wage growth plus bonuses stood at 4.1 per cent between April-June. This could prove to be an interesting figure for state pensioners as next month’s data is a key part of the formula for the state pension triple lock.
“The triple lock aims to increase the state pension by whichever is highest of average wages (May-July), September’s CPI inflation or 2.5 per cent. With inflation standing at 2.6 per cent, this suggests, barring a shock inflation spike over the next couple of months or collapse in average wage growth, that wages will be the element used.”
Morrissey added: “Should next month’s figure remain the same as today’s, this would put someone on a full new state pension on around £251.20 per week, up from £241.30 per week. Someone on a full basic state pension would see their weekly amount rise from £184.90 per week to around £192.50 from next April.”
Impact on pensioners
From April 2027, the full new State Pension is projected to rise above the frozen £12,570 Income Tax Personal Allowance due to the triple lock. The government confirmed that pensioners whose sole income is the new state pension will be exempt and will not pay income tax on it. Pensioners who have extra private pensions, savings income, or a part-time job that pushes their total income above £12,570 will still owe income tax on the amount exceeding the personal allowance.
