Pensioners are set for a bumper 8.5% state pension increase from next April.
Someone on the full, new state pension will see their pension grow from just under £204 per week to just over £221 per week from April 2024.
And someone reaching state pension age before 2016 could see their full, weekly, basic state pension increase from around £156 to about £169.
The 8.5% increase, in line with average earnings growth, was confirmed in the autumn statement.
This huge increase is down to red hot wage data stoked by one-off bonuses made to NHS and civil service workers during the summer— Helen Morrissey, Hargreaves Lansdown
Helen Morrissey, head of retirement analysis at financial services provider Hargreaves Lansdown, said: “Today’s announcement will be greeted with relief by pensioners who have been struggling with the rising cost of living.
“With inflation starting to fall back, the 8.5% increase will start to put some much-needed space in people’s budgets.”
Under the triple lock, the state pension rises each year in line with inflation, earnings or 2.5% – whichever is higher.
Ms Morrissey continued: “This huge increase is down to red hot wage data stoked by one-off bonuses made to NHS and civil service workers during the summer.
“The concern was that a Government concerned about the ongoing cost of state pension would look to mitigate the impact by going for a lower figure.
“Options included using wage data that stripped out the effect of these bonuses or using the inflation figure.”
She added: “However, with an election on the horizon, it is understandable why Government may have decided against this, but debate will rage over whether the triple lock remains the best way to uprate the state pension long term.”
Jamie Jenkins, director of policy and communications at pensions mutual Royal London, said: “The triple lock has proved a lifeline for pensioners struggling to keep their heads above water amid the greatest cost-of-living shock in modern times.
“In committing to an 8.5% hike, the Chancellor has honoured the Government’s pledge and offered reassurance to millions that they will be able to stay ahead of the inflation curve for the short term at least.”
Even with the triple lock being honoured in full next year, some older people on low fixed incomes will still find life extremely tough— Caroline Abrahams, Age UK
Caroline Abrahams, charity director at Age UK, said: “We’re pleased and relieved the Government kept its promise to older people to honour the triple lock… Today’s decision also crucially makes is more likely that older people will keep their homes adequately warm this winter, with less fear of facing an energy bill they simply cannot afford to pay come the spring.
“Even with the triple lock being honoured in full next year, some older people on low fixed incomes will still find life extremely tough, especially those whose incomes take them just above the line for extra financial help.
“We had called for more support for this hard-done-by group, who will receive their triple lock increase but no more. Longer-term, governments need to think creatively and do more to help them.”
Baroness Ros Altmann, a former pensions minister, said: “Inflation may have halved but is still high. Forecasts that it will fall further are just that, forecasts. Pensioners must not be left out if inflation resurges, as the announced increase will run until April 2025.
“That is not to say the triple lock pledge in future is the best policy option for pensioner protection… I believe a comprehensive, cross-party review of state pension uprating is needed, investigating better ways to control costs rather than just scrapping the triple lock.”
