Millions of state pensioners could see payments rise by £869 from next year

15 August 2023 , 13:24

716     0

State pension payments could see another bumper rise from next year (Image: Getty Images/iStockphoto)

Millions of state pensioners could be set to receive another bumper increase to their pension payments from next year.

Official figures published today by the Office of National Statistics (ONS) revealed regular UK wages with bonuses included increased by 8.2% in the three months to June - this is the highest annual growth rate since 2001. Excluding bonuses, the figure was 7.8%.

Under the Tory Government triple lock pledge, state pensions rise every year by whichever is highest out of inflation, earnings or 2.5%. Pay growth for the three months to July is the figure that counts for the triple lock, while inflation for the year to September is the key inflation figure.

Inflation currently sits at 7.9% - which means if it stays the same or drops, the Government is likely to use the earnings figure to decide how much the state pension will rise by. If this is the case, on top of the 10.1% increase already seen in April this year, state pensioners will see their incomes increase by nearly 20% over the last two years.

According to calculations by LCP, based on a full state pension of £203.85 a week in 2023/24, if earnings remain high in July then state pensions will be set to rise by 8.2% to £11,469. This is up from it's current amount of £10,600 and would take weekly state pension payments to £220.55.

Six teachers open up on 'difficult' strike decision - and why they are doing it

This will also increase the Department for Work and Pension's (DWP) spending on state pensions alone by £2billion. Although it's important to note that this is for those entitled to a "full" state pension, how much individuals get is based on the number of qualifying years they have.

However, we will not know exactly how much payments will rise until the official figures are released. The next wage growth figures for the three months to July will be published in September, while the September inflation figure will be announced in October.

Steve Webb, partner and former pensions minister at LCP said: “It seems very likely that the pension rise implied by the triple lock policy will be much higher than expected at the time of the March 2023 Budget. Although inflation is coming down, the rate of average earnings growth has been heading upwards and is likely to be the key factor in determining next year’s state pension rise.

"An extra £2billion bill arising from higher than expected earnings growth seems quite plausible. But it is unlikely that this would lead the government to break the triple lock, especially in the run-up to a likely 2024 General Election”.

Ruby Flanagan