The Treasury expects the new full state pension to increase by more than £400 a year in cash terms, according to internal calculations seen by the BBC. The rise is driven by the triple lock mechanism, which guarantees the pension increases each April by the highest of inflation, average earnings growth, or 2.5%. Average earnings figures due next week are expected to trigger the boost.
The increase will take the full state pension for men born after 1951 and women born after 1953 to around £12,000 next year, following a £900 rise last year. For pre-2016 retirees, the basic state pension is likely to rise by at least £300 to about £9,000. However, the overall gain for many pensioners will be offset by the government's decision to cut the winter fuel payment for most households, meaning the net increase could be just £100 or £200.
Chancellor Rachel Reeves reiterated the government's commitment to the triple lock until the end of this parliament, despite the policy costing £130bn annually. The final decision on the uprating will be made by Pensions Secretary Liz Kendall ahead of the Budget next month. The triple lock, introduced by the coalition government in 2010, ensures the state pension keeps pace with living costs or earnings.
Critics argue that the above-inflation rise does not compensate for the loss of winter fuel payments, which will affect millions of pensioners. Former pensions minister Sir Steve Webb warned that 1.6 million older people living in poverty could lose the payment. Campaigners and opposition parties call for more support, particularly for rural households below the poverty line.
