The government led by Andy Burnham is set to raise the State Pension by £540 next year under the triple lock, as average earnings growth looks likely to determine the increase.
Triple Lock Commitment
The Prime Minister committed to the triple lock when entering Downing Street in July, telling Reddit users it was "important" that Labour's 2024 general election manifesto commitment stands. The triple lock guarantees the State Pension rises each year by the highest of inflation, average earnings growth, or a flat 2.5%.
With wage growth including bonuses at 4.3%, this measure currently looks likely to determine the next rise. UK wage growth slowed to 3.4% for regular pay and 4.3% for total pay in the first quarter of 2026, according to the Office for National Statistics.
Impact on Pensioners
Real wage growth adjusted for inflation remained marginal at 0.3%, using CPIH, which includes owner-occupier housing and council tax costs. The latest Consumer Prices Index inflation rate of 2.6% is below the earnings growth rate.
An increase set by wage growth would mean £10.30 a week for state pensioners on the full State Pension, increasing payments to £251.60 or £13,086 a year, up by £540.
Pressure on the Triple Lock
The news of the possible increase comes as the triple lock policy remains under pressure from critics and Britain's straitened public finances. The Office for Budget Responsibility (OBR) warned in July that the triple lock will add billions of pounds to public spending in the decades ahead.
Under the agency's baseline scenario, State Pension spending is projected to rise from 5% of Gross Domestic Product (GDP) to about 9% by 2075-2076. This is partly driven by more older people in the population, while the triple lock is estimated to account for about a third of this rise, according to the OBR.
Cost of the Triple Lock
Volatile inflation and earnings growth mean the triple lock has been more costly than initially expected when introduced in 2012. The OBR estimates the triple lock will have added about £15.5 billion to state pension spending each year by 2029-2030, up from the £5.2 billion a year originally costed.
The Organisation of Economic Co-operation and Development (OECD) last month urged the Government to reform the triple lock. In a report, the OECD said: "Given political economy challenges and the existing commitment to the triple lock guarantee over the current Parliament, the Government’s effort should focus on setting the ground for lasting reform."
