Millions of pensioners are set to receive a 4.1 per cent boost to their state pension from April 6, but a lesser-known rule means not everyone will see the full increase.
While the headline rise exceeds the current inflation rate of 2.8 per cent, some will see their payments rise by just 1.7 per cent.
People who reached state pension age before April 2016 and are entitled to the Additional State Pension will see a smaller percentage increase than those on the full new state pension.
Steven Cameron, Pensions Director at Aegon, told GB News: “Under a little-known rule, those receiving an earnings-related pension on top of their basic state pension will see these elements rise by just 1.7 per cent, in line with last September’s inflation rate.”
Unlike the full state pension, which follows the triple lock formula, these additional payments are linked to Consumer Price Index (CPI) inflation, leading to smaller increases for some retirees.
The triple lock guarantees that state pensions increase by the highest of three measures: average earnings growth, inflation, or 2.5 per cent. This year's rise is based on the earnings growth component, which exceeded both inflation and the minimum guarantee.
'Little known rule' means millions won't see payments rise in line with triple lock
GETTYThis system operated under various names over time, including the State Second Pension and before that, the State Earnings-Related Pension (SERP).
For each qualifying year, individuals accrued extra pension entitlement based on a percentage of their earnings between lower and upper salary bands.
Higher earners could accumulate substantial additional amounts, with Which? calculating the maximum Additional Pension for 2024/25 at £218.39 per week .
Some people opted to 'contract out' of this component, receiving National Insurance rebates paid into private pensions instead.
From April 6, most state pensioners will receive a 4.1 per cent increase, based on the earnings growth component of the triple lock. This rise outpaces the current inflation rate of 2.8 per cent, effectively boosting pensioner purchasing power.
From April 6, most state pensioners will receive a 4.1 per cent increase,
GETTYFor those on the full new state pension, this means an increase of £9.10 per week, from £221.20 to £230.30, equating to £11,975.60 annually.
While the 4.1 per cent increase is lower than the past two years' rises of 10.1 per cent and 6.7 per cent it still represents the fourth-highest jump since the triple lock was implemented in 2011.
For those on the basic state pension, who reached state pension age before April 2016, the increase will be £6.95 per week.
This brings their weekly payment to £176.45, or £9,175.40 per year.
Britons are worried about the future of the state pension GETTYPensioners can check if they're entitled to Additional State Pension by requesting a state pension forecast, which provides a breakdown of various elements.
"When you claim your state pension, you'll be told if you're entitled to an Additional State Pension, and if so, how much," explains Cameron.
Those with Additional State Pension will see their overall state pension increase by less than the full triple lock rate when it exceeds inflation.
Other elements, including extra pension gained from delaying state pension, will also only increase by the September inflation rate of 1.7 per cent.
This creates a complex situation where total pension increases vary between individuals based on their specific entitlements.