State pension set to rocket to £14,000 in just seven years
A stock image of pensioners
PA
State pensions pots could grow to £14,000 by the end of the decade, analysts have warned.
Pensioners look set to pocket extra cash as high levels of inflation continue to force the Department for Work & Pensions to dip into the exchequer to deliver payment increases.
AJ Bell’s retirement policy head Tom Selby warned the triple lock will become less sustainable as payments continue to soar over the next few years.
He said: “While committing to the triple lock might be viewed as the easy option politically for now, at some point, someone will have to be brave enough to admit this cannot go on forever.
Elderly people figures on top of a stack of coins
PA“If it did, the state pension would eventually be worth more than average earnings.”
AJ Bell has suggested the full state pension could total £14,377.40 by 2030 if inflation continues to remain higher than expected.
Such a rise would mean payments have increased by almost £4,000 from £10,600.
The financial services firm also calculated state pensions could reach £13,230.45 if the Bank of England’s inflation prediction materialised.
Department for Work and Pensions could need to dip further into the exchequer to fund soaring state pensions
gbnewsThe cost of the state pension for the Government is expected to increase by £23billion in real terms by 2027/2028 compared to the start of this decade.
Selby added: “The increased spend courtesy of the triple lock represents a massive increase in both absolute and proportional terms.
“Those rising costs will put pressure on current and future governments to either raise taxes, cut spending in other areas or find savings from the state pension system – possibly through a faster increase in the state pension age.”
However, the Conservatives and Labour have tried to put pensioners at ease in recent weeks by doubling-down on their commitment to protect the triple lock.
Work & Pensions Secretary Mel Stride walking out of Downing StreetPAWork & Pensions Secretary Mel Stride said the triple lock would “almost certainly” feature in the Tory Party’s manifesto ahead of the next general election.
A spokesman for Sir Keir Starmer confirmed Labour was also committed to the triple lock going forward.
The triple lock was introduced by ex-Prime Minister David Cameron in 2010.
The guarantee ensures pensioners' payments rise by earnings, inflation or 2.5 per cent.
The increase is dependent on which one of the three variables is highest.