State pensioners are still in line for a new annual boost of up to £488.80 despite Prime Minister Andy Burnham's announcement that the triple lock will be axed. The mechanism, which uprates state pension payments annually by the highest of inflation, wage growth or a flat 2.5%, is set to remain in place until at least 2030, meaning the next increase due in April 2027 remains on course.
Triple lock axe delayed until 2030
Mr Burnham has confirmed he will stand by the triple lock until the end of the current Parliament, with the switch to a system closer to a 'double lock' without wage growth not happening until 2030, if at all following parliamentary scrutiny. The announcement follows years of speculation and an outcry against curbing the benefit for state pensioners.
While the final assessment figures have not yet been released, current forecasts suggest new post-2016 state pensioners with a full National Insurance record are on course for a boost of up to £488.80 a year. Older state pensioners are in line for up to £374 extra.
Wage growth drives forecast increase
According to the latest analysis by financial platform Hargreaves Lansdown, new state pensioners are in line for a boost worth approximately £488 a year, as the triple lock is set to increase by 3.9% in April 2027. Currently, wage growth sits at 3.9%, higher than inflation at 3.1%, making wage growth the likely metric when the final triple lock is set at the next Budget in October.
Helen Morrissey, Head of Retirement Analysis at Hargreaves Lansdown, said: "Such an increase would put someone on the full new state pension on course to receive £250.70 a week from next April – up from the current £241.30 per week. Someone on a full basic state pension would receive £192.10 a week – up from £184.90."
She added: "This will be a welcome boost to pensioner incomes but even a full state pension is only ever going to cover the basics. If you want to live well in retirement, then you will need to take your pension planning into your own hands."
Minimum rise and retirement advice
If wage growth drops in the following three-month period, the calculation would reduce, but if it increases, the triple lock rises yet higher. The absolute minimum rise possible for a post-2016 pensioner is £313.69, as this is the minimum floor 2.5% for an increase.
Ms Morrissey added: "If you have a gap between what you have and what you need, then taking small actions, like boosting contributions every time you get a pay increase or a promotion could have a big impact over time."
She also noted that employers might be willing to increase their contribution if employees increase theirs, known as the employer match, and that a steady drip feed of contributions invested over the long term can transform retirement. She added: "Take stock of what you have, and if you have any extra money to contribute, it can still make a huge difference. You can usually access money in a pension from age 55 (rising to 57 in 2028)."
