Bittersweet boost: UK state pension to rise by 4.1 per cent due to triple lock
The state pension will rise by nearly £500 next year, giving pensioners a “welcome boost” as the government presses on with its plans to means-test winter fuel payments.
Under the pensions triple lock, the state pension rises each April in line with whichever is highest of inflation, average wage increases or 2.5 per cent.
Figures out this morning confirmed that inflation fell to 1.7 per cent in September, confirming that average earnings data will trigger the triple lock.
The triple lock is tied to July’s earnings figures, which were published last month.
The figures initially showed that average earnings rose 4.0 per cent in the year-to-July. However, a revision to the figures, published yesterday, bumped up wage growth to 4.1 per cent.
This revision means the new state pension, which applies for people who reached state pension age after April 2016, is likely to rise from £221.20 per week to £230.30 next year. The increase is worth around £472.
The old basic state pension should increase from £169.50 per week currently to £176.45 next year.
Steve Webb, partner at Lane Clark & Peacock and a former pensions minister, said that a “slightly higher rate of increase is welcome for pensioners, though will be an unwelcome £100m extra cost for the Chancellor as she prepares her Budget”.
The projected increase to the state pension comes as the government faces a backlash from its plan to means-test winter fuel payments.
The proposed cut will remove the benefit—worth up to £300 per year—from around 10m pensioners, saving the exchequer up to £1.5bn.
David Brooks, head of policy at Broadstone, said: “Given the loss of Winter Fuel Payments for those not claiming in Pension Credit, this will be a welcome financial boost for many pensioners”.
The government argues that the increase in the state pension will offset any loss of income from the winter fuel payments.
However, the proposals have still attracted criticism from many figures across the political spectrum, with research suggesting many vulnerable pensioners will struggle to heat their homes.
Stephen Lowe, communications director at Just Group, said pensioners will see today’s news as “bittersweet” given the removal of the benefit.