The state pension is likely to rise by 10% or so in April 2023 - while millions of Brits see a real-terms wage cut.
Benefits including Universal Credit are also likely to rise by around 10% at the same time, the latest forecasts suggest.
This is because both rises are based on inflation, and inflation is of course soaring at the moment.
It’s not all good news though, by any means.
The first big problem is that there’s a long “lag time”, so you’ll only start getting these higher payments in April 2023.
That is despite predictions inflation will hit 13% from October, and fears the energy bills price cap will top £4,200 a year from January.
Brits are likely to be paying more than triple what they did last winter for gas and electricity, all before higher pension and benefit rates kick in.
Next, the rises could still be lower than this winter’s peak of inflation, which is set to hit 13% in October and stay high in November and December.
And of course in cash terms they clearly won’t make up for the energy bills hikes on their own. Average bills could be more than £200 a month higher in January than last winter - the state pension could rise about £80 a month.
Don’t forget, in April 2022 the State Pension and benefits rose by only 3.1% - far less than inflation was at the time. So it’s still playing catch-up.
We look at how much the state pension is likely to rise and what the ‘triple lock’ has to do with it.
When will the State Pension next increase?
The next rise in the State Pension will be in April 2023 - likely on Monday 10 April, to be precise.
How much will the State Pension increase?
The exact rate from April 2023 will only be confirmed by the government towards the end of November 2022.
However, because it uses a similar formula each year, we can - for now - roughly estimate it will go up by about 10%.
The State Pension rises by the highest of 2.5%, wages, or inflation due to the ‘triple lock’ (more below) - and this year it’ll definitely be inflation.
It will most likely use the figure of CPI inflation for September, which will be published at 7am on Wednesday 19 October.
In its August forecast the Bank of England projected inflation will remain around 10% for September, before rising to 13% in October.
That would take the New State Pension from £185.15 to £203.67 per week, a rise of £18.52. It would take the basic pension under the Old State Pension system from £141.85 to £156.04, a rise of £14.19.
What is the triple lock?
The 'triple lock' has run since April 2011 and guarantees bumper pension rises each year. It was actually proposed by the Lib Dems in the 2010 election but became a firm Tory policy as part of the Coalition deal.
Under the policy, state pensions rise every April by whichever is highest out of:
- Inflation. This is usually Consumer Prices Index (CPI) inflation in the year to the previous September.
- Earnings. Usually the rise in average weekly earnings in the year to the May-July period the previous year.
- 2.5%. If this set figure is higher than either of inflation or earnings.
The triple lock was suspended for April 2022, because it would have given pensioners a higher rise based on an anomaly in wages caused by Covid.
Downing Street has guaranteed the triple lock - which was a Tory manifesto commitment in 2019 - will be restored this year. However, it is in theory possible that Rishi Sunak or Liz Truss could review or change it before the pension rate is set in November.
