Second bumper state pension rise could be cemented tomorrow with 'another boon for pensioners'
The triple lock means the state pension increases by the highest out of wage growth, earnings and inflation
PEXELS
A second bumper state pension rise could be cemented tomorrow, with experts predicting “another boon” for retirees.
The data typically used for the earnings element of the state pension triple lock will be released on Tuesday, giving pensioners an idea of how much their state pension could rise in April 2024.
A trend of high earnings growth figures in recent months has sparked speculation that there could be another significant boost next year.
Figures released last month showed that in the three months to June, this measure of earnings growth spiked to 8.2 per cent – higher than CPI inflation, which has eased to 6.8 per cent.
An expert said 'spiralling wage growth is set to provide another boon for retirees in 2024'
PEXELS
Tom Selby, head of retirement policy at AJ Bell said if wage growth and inflation “continue on their current trajectories” then it would be wage growth in the three months to July, which will be published tomorrow, that determines the 2024/25 triple lock rise.
Mr Selby added: “Spiralling wage growth is set to provide another boon for retirees in 2024, a year after the state pension surged by 10.1 per cent on the back of sky-high inflation in 2022.
“It could also leave prime minister Rishi Sunak and chancellor Jeremy Hunt with a multi-billion pound black hole in the public finances ahead of the Autumn Statement in November.
“With inflation falling, it is now a near certainty tomorrow’s wage growth figure will determine next year’s ‘triple-lock’ state pension rise.”
If the wage growth figure came in at more than eight per cent again, the full new state pension could surge past £220 a week, working out at almost £11,500 a year.
The triple lock policy means the state pension increases by the highest out of wage growth, earnings and inflation.
Last month, Prime Minister Rishi Sunak confirmed the government will stick to its state pension triple lock pledge next year, despite signs of an extra £10billion cost.
However, he refused to commit to keeping the pension triple lock in the next Conservative manifesto this weekend.
Mr Selby warned significant increases will “inevitably spark debate” regarding the future of the triple lock.
He said: “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.
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Prime Minister Rishi Sunak confirmed the government will stick to its state pension triple lock pledge next year
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“Those in favour of the policy, meanwhile, will likely point to the fact the UK’s state pension is relatively low when compared with other countries.”
The policy could see state pension spending rise by anything between £5billion and £45illion a year in today’s terms by 2050, according to new research by the Institute for Fiscal Studies (IFS).
Mr Selby warned: “For savers, this lack of certainty about future increases makes it difficult to plan their own retirement saving.
“What’s more, as the triple-lock increases the value of the state pension, other cost-saving measures – most likely future state pension age increases – will inevitably become more likely.”
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