Rishi Sunk said today the government is committed to its pension ‘triple-lock’ even though annual wage growth of 8.5% means next year’s increase will be among the best on record.
Under the triple lock, pensioners get the highest of three measures, namely average earnings, inflation, or 2.5%, based on data from the ONS released in August.
Earnings figures today showed average earnings were up by 8.5% including bonuses, indicating that the state pension could leap by 8.5% next April, raising the basic rate to £169.50 per week from £156.20.
Any increase still has to be ratified by the government later this year, but a spokesman for the PM said: “We remain committed to the triple lock and we will ensure that the state pension remains sustainable and fair across generations while providing security and dignity in retirement for millions of people across the country.”
In research published last week, the Institute for Fiscal Studies (IFS) calculated an additional £11 billion per year is being spent on state pensions as a result of the triple lock compared to likely payments without the guarantee.
However, pension advisers said that the increase, which follows a 10.1% hike last year, will push up to half a million people into a higher tax bracket hence clawing back a healthy sum for the Treasury.