State pensioners are being urged to review their budgets now as next year's triple lock increase "remains uncertain," according to a pensions expert. The triple lock guarantees that the state pension rises each April in line with the highest of 2.5 per cent, average earnings growth, or inflation.
Earnings growth ahead but gap narrowing
Kate Smith, head of Pensions at pension provider Aegon, said it is too early to say which figure will decide next year's increase. She said: "Earnings growth remains ahead of inflation at the moment, but the gap is narrowing."
She added: "With inflation rising and further data still to come, the outcome is far from certain and either measure could still determine next year's triple lock increase." The latest inflation figure was 2.9 per cent for the year to July 2026, while average earnings growth including bonuses was 4.1 per cent for the three-month period from April to June 2026.
Key dates for the triple lock decision
The triple lock is based on the inflation figure for the year to September, while the earnings growth figure used is for the period from May to July. The Office for National Statistics (ONS) will publish the relevant earnings figure as part of its report on September 15, while the inflation figure will come out on October 21, so the triple lock figure will be known by this latter date.
Ms Smith said global instability could cause an uptick in inflation. She said: "It's certainly possible that inflation could move higher pushing up the all-important September figure. Geopolitical tensions affect commodity prices, while extreme weather puts pressure on food costs. However, the final outcome remains uncertain and it's too early to say which element of the triple lock will ultimately come out on top."
Increase likely above 2.5 per cent floor
The retirement expert said one thing is fairly certain - the state pension uplift will likely be more than the 2.5 per cent floor. Ms Smith said: "What's clear is that pensioners are likely to receive an increase above the 2.5 per cent minimum bringing the new state pension to at least £12,861.40 per year."
The full new state pension currently pays £241.30 a week, or £12,547.60 a year. An increase of 2.5 per cent would increase payments to around £12,861.29. Tax is paid on the state pension as with other forms of income.
Review your budget and check entitlements
Now is a good time to check over household finances, Ms Smith said. She urged: "Anyone worried about rising costs should review their budgets now, check they're receiving all the support they're entitled to, including Pension Credit, the Winter Fuel Payment and the Warm Home Discount, and make sure any savings are working as hard as possible."
Pension Credit supports people of state pension age who are on a low income. The benefit tops up weekly income up to a minimum amount, and opens up access to other Government support. For single claimants, the benefit tops up income to £238 a week, while for those with a partner, joint weekly income is increased to £363.25 a week. Extra amounts can be added depending on circumstances, such as caring for another adult or having a severe disability.
Claiming the benefit can make a person eligible for other support, including council tax discounts, help with housing costs, and a free TV licence for those aged 75 or over.
