UK pensioners are set for a £460 rise in their annual pension after official jobs numbers for July confirmed average pay had risen by 4% over the past twelve months.
Under the triple lock mechanism for pensions, rises are set by the higher of annual CPI inflation, average wage growth (July quarter) or 2.5%.
That means an extra £9 per week on the new state pension of £11,502, with the total rising to £11,962 a year and the basic state pension to £9,167 from £8,814.
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown, said this rise still might not be enough to placate pensioners losing their winter fuel payments, especially how close it is now to personal income tax allowance.
“The loss of the winter fuel payment will be especially keenly felt by older pensioners on the basic state pension who receive larger payments but have seen a smaller increase in their state pension as they are not on the new flat rate pension.
“Life is also tougher for those who get pension credit and the winter fuel payment, who won’t be getting a cost-of-living payment this November.
Morrissey added this increase takes the full state pension to just shy of £12,000 next year compared to the £12,570 personal tax allowance.
“Given that the freeze to this threshold is expected to remain in place until 2028, it raises the spectre of the full state pension alone taking pensioners over it and into the realms of paying income tax during the next few years.
“If pensions are rising with price inflation at the point when the state pension eventually breaches the personal allowance, once tax is taken into account, retirees who get just the state pension will actually be worse off in real terms.”