State pension increase: Pensioners to get up to £900 a year boost

Pensioners look at finances with laptop and debit card

Inflation increased by 6.7% in the 12 months to September 2023, the same rate as in August

Jessica Sheldon

By Jessica Sheldon

Published: 18/10/2023

- 06:58

Updated: 19/10/2023

- 10:31

Pensioners got a 10.1 per cent state pension increase in April 2023, which was in line with inflation

Inflation increased by 6.7 per cent in the 12 months to September 2023, the same rate as in August.

It means pensioners are on track to get another “bumper” increase to the state pension of 8.5 per cent, in line with earnings, under the triple lock.

It would mean people on the full new state pension will get an increase of £902.20 a year.

The increase for those on a full basic state pension would be £691.60 a year.

WATCH NOW: Liam Halligan explains what inflation figures mean

Stephen Lowe, group communications director at retirement specialist Just Group, said the government will now need to decide whether they remain committed to the triple lock, or make amendments.

He said: “The government must now decide whether to implement an 8.5 per cent increase in the state pension next April, which will follow the 10.1 per cent increase applied earlier this year or suspend the triple lock.

"There is recent precedent for suspending the triple lock when the government said the pandemic had distorted wage growth and chose the lower inflation figure to apply to the 2022/23 state pension.

“The Prime Minister must now weigh up his party’s manifesto commitments, the state of the nation’s finances and his chances of success in a coming General Election before making a decision which is expected to be announced in the Autumn Statement. It won’t be an easy choice, especially for a Conservative government whose party has traditionally relied heavily on older voters."

Dean Butler, managing director for Retail Direct at Standard Life, part of Phoenix Group, warned there is "still a possibility" that the Government will opt to exclude bonuses from the average earnings measure for the triple lock this year, as has been speculated.

He said: "Even in that situation pensioners would still experience a 7.8 per cent boost.

“However, it could be a case of ‘be careful what you wish for!’ as an inflation-busting state pension will only fan the flames of debate around the long-term affordability of the payment."

Alice Haine, personal finance analyst at Bestinvest, agreed that the Government could "tinker" with the state pension triple lock.

She said: "Speculation is mounting that the Government may tinker with the triple lock equation, instead using the lower average wage growth figure, that excludes bonuses, of 7.8 per cent or perhaps even reverting to the latest lower inflation reading instead."

UK inflation remains more than three times the Bank of England's two per cent target.

Chancellor of the Exchequer, Jeremy Hunt, said: “As we have seen across other G7 countries, inflation rarely falls in a straight line, but if we stick to our plan then we still expect it to keep falling this year.

"Today’s news just shows this is even more important so we can ease the pressure on families and businesses.”

Jeremy Hunt in pictures

Chancellor Jeremy Hunt said 'inflation rarely falls in a straight line'


However, Rachel Reeves MP, Labour’s Shadow Chancellor of the Exchequer, said: “Working people have been left worse off because of thirteen years of chaos and instability under the Conservatives.

“Britain is forecast to have the highest rate of inflation of any other major economy next year, meaning higher energy bills and prices in the shop."

The Government pledged to half inflation by the end of the year in January, when it was 10.5 per cent.

GB News Business and Economics Editor Liam Halligan said today: "It doesn't mean that prices are flat. It means that prices in September were 6.7 per cent, as you say, up from September 2022.

"It was the same in August, it was 6.8 in July. So really inflation is flatlining."

Mr Halligan continued: "Why is inflation flatlining? Because food price inflation is coming down, down from 13.6 per cent in August to 12.1 per cent in September. So still very high food price inflation, but it's going in the right direction.

"Clothing inflation is coming down but only slightly from 7 to 6.9 per cent."

He added that the "real issue" is energy prices and petrol prices being "up very sharply".

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