STATE pensioners will be better off by £351 a year after a bumper four per cent rise next April, it is revealed today.
The inflation-busting increase means those receiving the full state pension will get £175.35 a week – up from £168.60. Under current rules, the state pension is increased by the triple lock – whichever figure is the highest out of earnings growth, price inflation or 2.5 per cent a year. The price inflation figure used is for the year to September, which will be announced in mid-October, following a fall in the August figure to 1.7 per cent, down from 2.1 per cent the previous month.
But the earnings growth figure used is that to July, which was four per cent, according to analysis for the Daily Express by insurance giant Aegon.
This means pensioners are on track to receive the four per cent boost – far above the rate of price increases.
However, there were warnings last night that the triple lock will prove too expensive for future Governments to guarantee.
Without the triple lock, the cost of the state pension is projected to increase by £21billion between 2020/21 and 2060/61.
With the triple lock, the increase is projected to be £35billion for the same period, figures from the Office for Budget Responsibility show.
Currently, ministers have only committed to continue the policy until 2022.
Steven Cameron, pensions director at Aegon, said: “Based on the latest earnings growth figures, it looks like state pensioners can look forward to an inflation busting four per cent increase in their state pension from next April.
“This will be welcome news for current state pensioners. However, these inflation busting increases do come at a significant cost. The state pension is not funded in advance so pensions are funded on a ‘pay as you go’ basis from today’s workers’ National Insurance contributions.
“With the prospect of an early general election, it will be interesting to see where each party stands on commitments to retaining the triple lock for the next five years.” The triple lock was announced back in 2010 as a way of making sure pensioners did not lag behind the working age population in terms of their purchasing power.
It was first used to increase state pensions in April 2011 and, since then, pensioners have done well, with overall increases outstripping both price inflation and earnings growth. A single person receiving the old basic state pension, which was £97.65 in April 2010, is now receiving £129.20, an increase of 32 per cent.
This far outstrips the cost of living price rises, which have gone up by 24 per cent, and average earnings, up by 20 per cent.
Those who reached state pension age on or after April 6, 2016, will be receiving the single state pension, and if entitled to the full amount, the increase would see their pension go from £168.60 to £175.35 per week.