Pensioners are set to receive a hefty increase in the payments they get from the state next year thanks to the government’s so-called “triple lock” system.
Withstanding any changes to the scheme, this will mean those on state pensions see these increased by 8.5% in line with average earnings growth come the start of the new tax year in April.
Though this remains to be confirmed by the government, this hike would equate to as much as £17.35 extra a week for some state pensioners, according to MoneySavingExpert.
This would take weekly payments to those on the newest state pensions to £221.20.
Under the government’s triple lock system, which was introduced in 2011, public sector pension increases are based on the highest figure out of average earnings growth, consumer price index inflation, or 2.5%.
Following September’s unchanged inflation reading from August of 6.7%, the largest of the three figures is June to August’s average wage growth of 8.5%.
However, speculation has built over whether this figure will even be used, given wages excluding bonuses grew instead by 7.8%.
The government is indeed reportedly mulling using the latter figure, given Chancellor Jeremey Hunt’s previously laid out quest of saving £2 billion of public finances a year.
“It is very clear that they [bonuses] are distorting the figures and are not an accurate representation of real-terms pay growth,” a government spokesperson told The Times.
“This is something that will need to be looked at carefully.”