The state pension is likely to rise by £488 next April to £13,036.40 a year, new official figures suggest.
Under the triple lock pension guarantee, the annual increase is based on either average wage growth, inflation or 2.5% – whichever is highest.
Average wage growth, including bonuses, between May and July slowed to 3.9%, according to the Office for National Statistics.
The triple lock has come under scrutiny in recent months as the number of pensioners is expected to rise in the coming years, making the policy more expensive.
The triple lock is creating a “ratchet effect” where “pensioners’ living standards grow even faster than just a typical worker,” Ruth Curtice, the chief executive of the Resolution Foundation, told the on Tuesday.
The triple lock was introduced in 2012 in response to pensioner poverty rates.
Curtice told the Today programme: “It’s not affordable in any situation to simply have pensions rising faster than earnings because earnings are a big part of the tax base.
“Pensioners have seen living standards grow three times more than typical workers over the last 20 years.”
Almost 13 million people receive the state pension in the UK. If it does rise by 3.9%, it would take the flat-rate state pension above the personal allowance of £12,570 and so be liable for income tax.
The Labour government has previously pledged that pensioners who rely solely on the state pension would not be required to complete a tax return, nor be chased to pay.
The increase to next year’s state pension will not be confirmed until September inflation is released next month. Inflation is currently 2.9% and not expected to be higher than the wages figure.
This mean:
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the fslat-rate state pension – for those who reached state pension age after April 2016 – will likely be £250.70 a week, or £13,036.40 a year. That would be an increase of £488
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the old basic state pension – for those who reached state pension age before April 2016 – will likely be £192.10 a week, or £9,989.20 a year, an increase of £374.40
Liam McLaughlin, an associate economist at the National Institute of Economic and Social Research (Niesr) think tank, said the increased in the state pension added “fiscal pressure at a time when the triple lock is already under scrutiny”.
The ONS also published figures on the UK labour force. While the unemployment rate was unchanged at 4.9%, the number of vacancies and employees on payrolls fell in recent months.