MILLIONS of people are set for a bumper rise of £869 to their state pension payments next year.
It comes after official figures published today revealed wages have risen at their fastest rate on record.
Millions of people are set for a bumper rise of £869 to their state pension payments next yearPA
The triple lock sees the state pension rise in line with whatever is highest out of: September’s wages figure, 2.5% or September’s inflation figures.
For the months of April to June, compared with a year earlier, total pay including bonuses was up 8.2%, the Office for National Statistics revealed.
This has prompted several experts to expect wages will be the deciding factor on how much state pension payments will be going up by in April 2024.
It means, if the rate continues to increase the way it is, pensioners on the new state pension could be looking at an extra £869 a year.
This would mean an increase from £203.85 a week to £220.55 per week.
It’s important to note though that this is for those entitled to a “full” state pension, how much individuals get is based on the number of qualifying years you’ve accrued.
Inflation currently sits at 7.9%, but it is forecast to fall to 7% in September – although we won’t know if that’s the case until October when the figure is announced for the previous month.
Fresh inflation figures will be announced tomorrow for July, which will give further indication of how much it could fall or rise by come September.
It means that if things continue the way they are going, wages will remain the higher figure when the increase is revealed.
Experts such as Steve Webb, former pensions minister and partner at LCP, said that earnings growth has proved robust in recent months, while inflation is starting to dip.
Steve said: “It seems very likely that the pension rise implied by the triple lock policy will be much higher than expected at the time of the March 2023 Budget.
“Although inflation is coming down, the rate of average earnings growth has been heading upwards and is likely to be the key factor in determining next year’s state pension rise.”
Steve expects the government is “unlikely” to opt to break the triple lock prior to a potential general election in 2024, as it has done in the past due to the pandemic.
Interactive Investor’s calculations suggest that pension payments will go up by 8.2% to £11,469 in April, assuming wage inflation remains high in July.
This is up from it’s current amount at £10,600.
Alice Guy, head of pensions and savings, at II said: “The rising state pension is great news for pensioners, especially the millions that have no other income apart from the state pension.
“Pensioners on low incomes have been particularly hard hit by the cost of living crisis and it will be a welcome relief to receive an extra boost next April.”
Head of retirement analysis at Hargreaves Lansdown Helen Morrissey has also warned that next month’s figures are the ones to look out for.
She said: “Next month’s average wage figure is the one to keep an eye out for and we then have to wait until the September inflation figure is published in October before we know what the state pension under the triple lock will be.
“We may not see the eye-wateringly high increase in state pension that we saw last year (10.1%) but something in the region of 7% is not out of the question.”
She pointed out that even a 7% rise would push up the full new state pension to more than £11,300 per year.
A rise would also push up pension credit amounts for the most hard-up pensioners.
For those struggling right now, anyone struggling with their bills can get access to extra help though.
The Government is offering out three cost of living payments worth £900, between £150 to £300, and £150.
The first instalment of the main £900 payment was made earlier this year.
The second and third instalments are set to be paid in autumn this year and spring 2024.
Meanwhile, millions of pensioners will receive a £150-£300 top up to their Winter Fuel payment.
And the £150 payment has been paid to millions with disabilities.
How much is the state pension?
State pension payments were increased in April this year.
The full rate of the new state pension rose from £185.15 a week to £203.85 – in line with last September’s 10.1% inflation rate.
This equates to £10,608 in total over a year.
This is what the state pays those who reach state pension age after April 6, 2016.
The amount of new state pension you receive depends on your National Insurance (NI) record throughout your adult life.
If you have made at least 35 years of qualifying NI contributions, you may qualify for the maximum amount, outlined above.
The same is true if you have received equivalent credits on your NI record for raising children or providing care.
If you don’t have 35 years, you may be able to top up your record by paying in voluntary NI contributions.
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