New official earnings figures point to a 3.9% rise in the state pension next April, which would take the new state pension to £250.70 a week – £13,036 a year – according to BBC Radio 4 Moneybox expert Paul Lewis.
The Office for National Statistics (ONS) reported that total wage growth stood at 3.9% in the three months to July, down from 4.2% in the three months to June. This figure is key to the pensions triple lock calculation and puts pensioners on course for a 3.9% uplift next year, according to experts.
Key date for pensioners
Mr Lewis explained that the key date when pensioners will find out exactly what they will get is October 20, when the figures are revised. He said the expected rise is “nothing to do with triple lock” as the law says the pension will rise by wages unless the Secretary of State decides differently.
“The triple lock policy (not law) is that they will if inflation or 2.5% is higher than wage rises. That is unlikely this time,” he said.
If the state pension rises by 3.9%, the standard new state pension will rise £9.40 a week to £250.70 (£13,036 a year), while the basic old state pension – which most get – will rise £7.20 to £192.10 a week (£9,989 a year).
Jobs market data
The ONS said there were around 8,000 fewer vacancies quarter on quarter in the three months to August, at 702,000 – the lowest since spring 2021, or, outside the Covid pandemic years, for over a decade. Small firms are flagging ongoing pressures from rising wage bills as a factor holding them back from taking on staff.
The UK unemployment rate remained unchanged at 4.9% in the three months to July, but more timely data estimates that workers on payrolls slumped by 26,000 during August to 30.2 million, following a 19,000 drop in July. The August drop is the largest payroll decline since November last year.
Liz McKeown, ONS director of economic statistics, said: “Payrolled employee numbers continue to edge down, with falls over the past year particularly evident in the retail and hospitality sectors.”
Interest rate outlook
The figures come ahead of the interest rate decision on Thursday, with Bank of England policymakers expected to vote to hold at 3.75%. Thomas Pugh, chief economist at RSM UK, said that despite ongoing weakness, the statistics show signs of stabilisation in the jobs market, which may give the Bank room to increase rates to combat inflation in the coming months.
Mr Pugh said: “The Monetary Policy Committee (MPC) has so far relied on the weakness of the labour market as cover for keeping rates on hold, but that position looks increasingly difficult to hold if the labour market stabilises and inflation rises to around 4%.”
Pantheon Macroeconomic experts now expect the Bank to raise rates in November and next February, as attentions turn to “whether a loosening labour market can offset what surging energy costs will eventually do to wage growth and inflation”.
Work and Pensions Secretary Pat McFadden said the ONS figures “show a labour market that remains resilient in the face of significant global economic pressures”.
