State pensioners aged under 77 are set to receive up to £489 more per year as the next triple lock figures take shape ahead of the Budget on October 28. New state pensioners who reached state pension age during or after April 2016, meaning they are now no older than 77, are in line for a larger increase than older pensioners because their weekly payments are higher.
Triple lock increase details
The Office for National Statistics (ONS) reported on Wednesday that Consumer Prices Index (CPI) inflation stood at 3.5% in September, up from 3.1% in August. However, this does not exceed the 3.9% wage growth figure already published.
Someone on the full new state pension would receive £250.70 per week from next April, up from £241.30 per week currently. The new state pension, introduced in 2016, applies to all men born after April 5, 1951 and women born after April 5, 1953.
Basic state pension and tax implications
A person on a full basic state pension would receive £192.10 per week, increasing from £184.90, reaching around £9,989 per year. Many people do not receive the full state pension.
With the personal tax allowance frozen at £12,570, some pensioners are heading towards being caught within the tax net, as the annual new state pension is poised to rise to around £13,036 next year.
Triple lock commitment and future plans
Prime Minister Andy Burnham has confirmed he will stand by the triple lock for the rest of this Parliament, despite plans to adjust it from 2030. The triple lock uprates state pension payments annually by whichever is highest of inflation, wage growth, or a flat 2.5%.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: "The state pension is, and will remain, a firm foundation on which to build your retirement income."
"However, the reality is it is only going to cover the basics no matter how it is increased. If you want to maintain the lifestyle you enjoyed while working, it's important to make the most of your pension."
From April 2030, Labour plans to adjust the triple lock to help fund a new National Care Service in England. Under the plans, the state pension would continue to rise each year at least by CPI inflation or 2.5%, with the door left open to rising by more if needed so it holds its value relative to average worker earnings. State pensions are already expected to equate to around 30% of average earnings by the end of the decade.
