DWP State Pension boost worth £680 in Triple Lock handout

-Credit: (Image: Getty)
-Credit: (Image: Getty)

State pensioners are set to receive a boost of over £680 in the months following the General Election. Both Labour and the Conservatives had made pledges aimed at state pensioners in their manifestos during the election campaign.

With a Labour government now in power, we have a clearer picture of what the next year will look like in terms of changes to the state pension, income and taxation. Labour pledged to maintain the Triple Lock system in its current form.

This means that, if the promise is upheld, the government will distribute around £689 to state pensioners in the next financial year, unless there are significant economic shifts between now and August when the final calculation is made. The Triple Lock ensures that state pensioners, whether on the basic state pension or the new state pension, receive a guaranteed increase each year.

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The state pension must rise by either wage growth, Consumer Price Index (CPI) inflation or 2.5 percent, depending on which of these three metrics is highest. Currently, a wage growth figure of nearly six percent is set to provide an additional 5.9 per cent increase to pensioners on both the basic and new forms of the state pension from the next financial year, April 2025.

The Consumer Price Index (CPI) fell to two percent in May, down from April's 2.3 percent and marking the lowest level of inflation since July 2021, reports the Express.

The Consumer Prices Index (CPI) remaining at 6.7 per cent could have significant implications for millions of pensioners as it is a key component of the Triple Lock, which determines the annual increase in state pensions. Both the basic and new state pensions will rise by at least 2.5 percent, or whichever is higher between the annual wage growth from May to July or the CPI inflation rate year on year to September.

Currently, earnings growth appears to be highest at 5.9 per cent, but the final Triple Lock figure won't be decided until August's announcement. If the growth remains at 5.9 per cent, the state pension would increase from £221.20 a week to £234.45 or £937.80 per month.

This would result in an annual state pension of £12,191.40, up from £11,502.40, keeping the amount just under the personal allowance tax threshold of £12,570 assuming no other income - an increase of £689 per year. Labour has not matched the Conservatives' Triple Lock Plus pledge, which promised to adjust the income tax thresholds for Personal Allowance specifically for pensioners.

However, this year, the state pension wouldn't reach the threshold anyway, and it hasn't been announced if the Personal Allowance thresholds - which have been frozen for several years now - will be increased for everyone next year or frozen again.

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