UK State Pension expected to increase by over £650 next April, based on triple lock guarantee

The new state pension is expected to increase by over £650 from next April
-Credit: (Image: InYourArea)


Finance experts have predicted that the new state pension will increase by over £650 from next April, pushing it to just above £12,150 a year. This is based on the triple lock guarantee, which ensures the state pension rises in line with the highest of three measures - September inflation, May-July wage growth or 2.5 per cent.

In April 2022, the state pension saw an increase of 10.1 per cent due to rampant inflation, followed by another substantial rise of 8.5 per cent in April this year in line with the surge in pay growth. However, from April next year, the increase is expected to be significantly lower, with experts suggesting a rise of around 5.7 per cent.

Recent data from the Office for National Statistics (ONS) shows that the Consumer Price Index measure of inflation is currently just 2.3 per cent, indicating that this will not be used to set the benchmark for raising pensions next year. The second element of the triple lock - an uprating of 2.5 percent - is also unlikely to be the leading factor in deciding any increase.

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Industry experts suggest that, for the coming year, average wage growth will be the predominant option in the triple lock. This is currently at 5.7 per cent. Based on this, the payments from the new state pension would increase from £884.80 to £935.20 for every four-week period.

With 13 such periods in a year, this means the annual figure will rise by £655, taking it from £11,502 to £12,157, according to reports from the Express, reports the Express and Birmingham Live.

The basic state pension, which is paid to those who reached retirement age before April 2016, is potentially set to increase from £678 to £713.60, thereby elevating the annual figure from £8,814 to £9,276.80 for the fiscal year 2025-2026.

Steven Cameron, pensions director at Aegon, said: "In April 2023, a spike in inflation the previous year led to a record-breaking 10.1 per cent boost to the State Pension. For the April 2024 increase, earnings growth in 2023 resulted in an inflation-busting 8.5 per cent increase.

"These increases and the underlying high volatility present in both price inflation and earnings growth have since raised serious questions over the longer-term affordability of the State Pension, which is funded by today's workers through National Insurance contributions."

"With inflation now having fallen below the 2.5 per cent underpin, it's likely to be earnings growth that determines next year's triple lock increase, as the latest figures have this sitting at 5.7 per cent (for January to March 2024). The specific figure used for determining the triple lock will be the year-on-year increase in earnings for the period ending May to July 2024, which will be published in September.

"Barring a significant drop in earnings growth over the next few months, this figure will likely determine next year's triple lock."

He suggested that the substantial pension increases seen in the past two years are unlikely to continue.