State Pension Set to Increase by £460 Annually Following Wage Growth

Pensioners receiving the full state pension are anticipated to benefit from an increase of £460 annually starting in April, as reported by the Office for National Statistics (ONS).

The ONS detailed a total pay increase of 4% for the months leading up to July, indicating a rise in the full flat-rate state pension to £11,962.60 per year. This increment is part of the government’s “triple lock” system.

The “triple lock” guarantees that the state pension will increase each April based on the highest figure among the average total earnings growth, Consumer Prices Index (CPI) inflation, or a minimum of 2.5%.

Current expectations suggest that wage growth will be the determining factor for this year’s increase, given that inflation is not anticipated to surpass wage growth levels.

It is important to note that these figures are subject to further revisions, with the government expected to confirm the proposed increase in the autumn.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, cautioned that while the rise is welcome, it may not adequately compensate for the loss of winter fuel allowances for many pensioners.

She also highlighted the looming concern over the proximity of the new annual pension figure to the £12,570 personal tax allowance, potentially leading to increased income tax liabilities for pensioners in the coming years.

In terms of broader economic context, the ONS reported that regular wage growth has slowed to 5.1% year on year, the lowest level since July 2022.

The UK unemployment rate showed a slight decrease to 4.1%, while job vacancies fell to 857,000 in the three months leading up to August.

Liz McKeown, director of economic statistics at the ONS, stated that the growth in total pay has significantly slowed as one-off payments from public sector workers continue to affect the financial landscape.