The UK state pension is set to increase by more than £400 in cash terms next year, as Treasury estimates suggest it will surpass inflation.
The rise is expected to be driven by the “triple lock” mechanism, which dictates that the state pension rises annually based on the highest of three factors: inflation, average wage growth, or 2.5%. Given the strength of wage growth, pension payments are likely to be adjusted upwards in line with the earnings figures due to be released next week.
This boost follows a £900 increase in state pensions last year, bringing the full state pension for men born after 1951 and women born after 1953 to approximately £12,000 annually in 2024. For those who retired before 2016 under the old system, the basic state pension is likely to rise by around £300, bringing it to £9,000 per year.
Despite this increase, the government is facing significant criticism over its decision to cut winter fuel payments for most pensioners. With millions set to lose this assistance, some pensioners may see a net income increase of just £100 or £200 overall. Critics, including former pensions minister Sir Steve Webb, have voiced concerns about the impact on the 1.6 million older people living in poverty, many of whom are at risk of losing vital financial support.
Chancellor Rachel Reeves has reaffirmed the government’s commitment to maintaining the triple lock until the end of this parliament, though the final decision on next year’s pension increase will be made by pensions secretary Liz Kendall ahead of the autumn Budget.
The triple lock system, introduced in 2010, aims to ensure that pensions keep pace with both inflation and wage increases. However, campaigners and opposition figures argue that it is not enough to counteract the withdrawal of the winter fuel payment, particularly for vulnerable households in rural areas who already struggle with poverty.
