State pension set to rise — here's how much it could go up next April

Last week was a big one for state pensioners as average wage data, which is used as part of the triple lock, was released. The triple lock is the measure used to uprate the state pension every year, with the figure used being whichever is the highest of 2.5%, average wages or CPI inflation.

According to the stats, average wages, including bonuses, stood at 4.7% for the May-July period. If adopted, this would put pensioners in line for a decent increase in their state pension next year. Such an increase would see a full new state pension rise from its current level of £230.25 per week to £241.05 per week from April. Those retiring on the basic state pension would see their weekly income increase from £176.45 per week to £184.75.

However, it’s important to say that the hike is not yet set in stone. We are awaiting the final piece of the triple lock puzzle – September’s inflation data will be published next month and, if this were to be higher, then pensioners would be in line for an even bigger boost.

Read more: Why lifelong housing costs are derailing retirement planning for older people

However, this does seem unlikely given that inflation currently sits at 3.8%, with the expectation being that it will come in at around 4% next month.

So chances are that wage growth will be the key figure used. It's expected that chancellor Rachel Reeves will confirm the increase in November’s budget.Happy excited senior woman with white hair sitting on floor and stroking favorite Beagle dog while hugging pet at home·SeventyFour via Getty Images

It's also important to say that not everyone will get the increase on all of their state pension. Those on the new state pension will receive the uplift but those on the basic state pension will only receive it on their main state pension. Any further top ups, such as the state second pension, are usually uprated in line with inflation instead, so they won’t get the full benefit of the triple lock on their entire payment.

The increase will also add further pressure on the government who are battling an already burgeoning state pension bill. The government has committed to keeping the triple lock in place for the rest of this Parliament but, longer term, its future could be uncertain.

With a review into state pension age also ongoing, other options could include an extension of the current timetable, with dates for state pension age running into the late 60s and beyond.

However, consideration also needs to be given to the issue of healthy life expectancy and the reality that, while we may be living longer, this does not necessarily mean that everyone can continue to keep working. The state pension forms the backbone of people’s retirement income, and many people simply cannot afford to retire without it.

Story Continues

Read more:

What living longer means for your pensions and retirement planning Why high earners risk falling short in retirement What happens to your pension if your relationship ends?

Download the Yahoo Finance app, available for Apple and Android.

View Comments