State pension could rise by £400 next year but triple lock future 'questionable'
The state pension could jump by around £400 a year under current estimates
GETTY
The state pension in the UK is set to increase by more than £400 per year, according to internal Treasury calculations. This significant boost is thanks to the Government's triple lock pledge.
The triple lock ensures that the state pension rises annually by the highest of three measures: inflation, average wage growth, or 2.5 percent but analysts are questioning the long-term viability of how payments are raised every year.
Chancellor Rachel Reeves recently reaffirmed the new Labour Government's backing of the triple lock until the end of this Parliament.
The increase would take the full state pension to approximately £12,000 in 2025/26, following a £900 rise in 2023.
Pre-2016 retirees eligible for the basic state pension could see a £300 per year increase.
Thanks to the triple lock, pensioners' incomes are supposed to not be eroded by rising living costs or left behind as wages increase.
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Pensioners are finding themselves with not enough saved for retirement GETTY The potential increase would see the full state pension rise to around £12,000 in 2025/26, a significant jump from the current rate.
This follows a £900 increase implemented last year.
However, recent analysis revealed that only about half of those receiving the new state pension last year were getting the full weekly amount.
Research conducted by Royal London suggest around 150,000 pensioners were on less than £100 per week.
The full state pension for 2024/25 stands at £221.20 a week, up from £203.85 last year.
Reeves' commitment to the triple lock comes amid controversy over its decision to effectively scrap the Winter Fuel Payment for most households.
This move to means-test the energy bill benefit has sparked backlash with thousands of pensioners not eligible to apply for Pension Credit.
Despite this, pensioners are guaranteed to see their incomes rise in 2025 via the triple lock.
Even with the the pending pension increase, concerns remain about the disparities in pension payments.
Royal London's analysis of Department for Work and Pensions (DWP) data from spring 2023 showed that only 1,737,342 out of 3,407,567 people receiving the new pension were getting the full weekly amount.
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Future triple lock hikes are being called into question by analysts
GETTYJon Greer, the head of retirement policy at Quilter, has warned that the "sustainability" of the state pension triple lock continues to be "questionable".
He shared: "The debate around the triple lock often intersects with discussions on the appropriate level of the state pension relative to mean full-time earnings. There is a need for a consensus on the state pension level and a fair mechanism to ensure its value is maintained over time.
"Without such an approach, each uprating of the state pension risks creating generational divides. A system more closely aligned with average earnings might be more cost-effective and better reflect the nation’s overall prosperity.
“While the anticipated uplift in the state pension is positive news for pensioners, it is essential to consider the broader implications and sustainability of the triple lock policy. The Government’s pension review will latterly look at pensions adequacy which must consider both state and private provision. Perhaps the review will be the mechanism to start the journey for change that removes the politics from the triple lock.”
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