The new state pension could increase by 8.2% to £11,469 in April 2024 following record wage growth.
In the three months to June, annual pay growth in the private sector grew 8.2%, exceeding inflation of 6.8% in July.
The triple lock means that the state pension will rise annually by the highest of 2.5%, average earnings growth or inflation (based on September’s figures).
The only exception to the triple lock rise was in the 2022-23 financial year when the earnings measure was temporarily ditched due to unusually high wage growth during the pandemic.
“If wage growth and inflation continue on their current trajectories, then it will be wage growth in the three months to July that determines next year’s triple-lock increase,” said Tom Selby, head of retirement policy at AJ Bell.
So, if wage growth exceeds 8% again and inflation is lower as of September’s data, the new state pension could jump from £203.85 to £220.55 per week, while the basic pension could rise from £156.20 to £169 per week.
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While pensioners will welcome a boost in the state pension, the triple lock could cost the government £10 billion next year, according to interactive investor.
Any big increases in the state pension will likely prompt debate about whether the triple lock should be retained or adjusted, so it rises based on two measures, instead of the current three.
“Those against the policy will argue it risks perpetuating intergenerational unfairness, particularly if retaining the pledge results in the tax burden on working people being driven upwards,” commented Selby.
“Those in favour of the policy, meanwhile, will likely point to the fact the UK’s state pension is relatively low compared with other countries.”
He believes more stability is needed over state pension policy, including cross-party agreement on how much income it should offer and how many years on average someone should receive it.
