CashNews.co
The full state pension is expected to increase by £460 from next April, based on official wage figures. The Office for National Statistics (ONS) reported that total pay grew by four percent in the three months leading up to July.
Although this is the lowest wage growth in nearly four years, it will result in the full, flat-rate state pension rising to £11,962.60 a year from April, an increase of £460.
Under the “triple lock” guarantee, the state pension rises each April in line with the highest of three measures: average earnings growth between May and July, CPI inflation in September, or 2.5 percent.
As inflation is expected to be lower than wage growth, the wage figure is likely to be used for the calculation.
However, the figures may be revised in next month’s data, and the Government will confirm the planned increase in the autumn.
But if based on today’s data, the triple lock guarantee would mean:
- The full ‘new’ state pension will increase from £221.20 per week (£11,502 per year) to £230.05 per week (£11,962.60 per year)
- The basic state pension will increase from £169.50 per week (£8,814 per year) to £176.30 per week (£9,168 per year).
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, cautioned the rise in the state pension will only partially offset the pain for the millions of pensioners who are being stripped of their winter fuel allowance.
She said: “There’s every chance it’s not enough to placate those pensioners still reeling from the loss of the winter fuel payments, especially given how close this is edging to busting the personal allowance.”
She also warned the new annual pension is moving closer to the £12,570 personal tax allowance.
Ms Morrissey said: “Given that the freeze to this threshold is expected to remain in place until 2028, it raises the spectre of the full state pension alone taking pensioners over it and into the realms of paying income tax during the next few years.”
ONS data revealed that regular wage growth slowed to 5.1 percent year-on-year in the three months to July, the lowest level since the period ending in July 2022.
After accounting for Consumer Prices Index inflation, UK workers saw their real pay increase by three percent, down from 3.2 percent in the previous three months.
The ONS also reported that the unemployment rate fell to 4.1 percent over the three months to July, down from 4.2 percent in the prior period.
Job vacancies declined, dropping by 42,000 from the previous quarter to 857,000 in the three months to August.
Liz McKeown, ONS director of economic statistics, commented: “Total pay growth has slowed significantly as the impact of one-off payments to many public sector workers in June and July last year continues to distort the figures.
“Basic pay growth has also slowed, though to a lesser extent.
“Across our different measures, when considered comparably, employee growth has continued in the latest quarter, although annual growth has decelerated over the year.”