The popular guarantee means the state pension is raised by the highest of inflation, wages growth or 2.5 per cent
The state pension is on course to top £10,000 a year if the Government keeps its promise to reinstate the ‘triple lock’ on annual increases.
The popular guarantee means the state pension is raised by the highest of inflation, wages growth or 2.5 per cent – but it was ditched last year because the pandemic temporarily skewed the earnings figure.
The inflation rate will be highest this year, so the state pension increase should be decided by the September CPI figure, which is due out on 19 October.
Inflation in August, published last week, was running at 9.9 per cent, down from 10.1 per cent. The latest earnings growth figure, based on total pay including bonuses, was 5.5 per cent.
But older people waiting anxiously to find out what state pension increase they will get next April might find it still lags behind prices.
Inflation could stick at around 10 per cent during the key month of September, but rise further this winter despite the Government’s freeze on the energy price cap.
Last year, the triple lock was suspended because wage rises were distorted as the labour market recovered from the impact of Covid-19.
But this year, sky high inflation is taking a severe toll on pensioners struggling to pay household bills.
If the 9.9 per cent inflation rate from August was used, pensioners on the post-2016 full rate state pension of £185.15 a week or around £9,600 a year would see a rise to £203.50 a week or £10,600 a year.
Those on the old basic rate would see a jump from £141.85 a week or around £7,400 a year to £155.90 or £8,100 a year.
During the Tory leadership campaign, Prime Minister Liz Truss promised to reinstate the triple lock this year, but is likely to come under pressure to u-turn due to the squeeze on public finances.
There is overwhelming support for the triple lock among pensioners, though less among younger generations.
Some 55 per cent of adults overall back keeping the triple lock under the current circumstances, according to a Canada Life survey weighted to be representative of all UK adults.
But that breaks down to 78 per cent among over-55s, 44 per cent among 35 to 54-year-olds and 33 per cent among 18 to 34-year-olds.
Separate research from Canada Life found two fifths of UK adults have made cutbacks to spending as a result of rising prices.
Some 37 per cent are worried about their own or their household finances, and 31 per cent are already feeling the impact of inflation on their finances.