Millions of pensioners could receive an 8.5% rise in their state pension payments in the new tax year, thanks to soaring wage growth.
The state pension is protected by the ‘triple lock’, which means the benefit will be boosted by either September’s inflation, earnings growth (from the period between May to July) or 2.5% – whichever is highest.
Here, we explain how much the state pension is likely to rise next year, using the latest available figures, and how much your weekly payments could change.
How much could the state pension rise?
It’s probably safe to assume that the state pension won’t rise by the guaranteed 2.5% minimum in April 2024, as the latest inflation and wage growth figures are tracking way above this benchmark.
Average earnings growth
The government takes the average wage growth year-on-year for the May to July period.
According to the Office for National Statistics (ONS) released today (12 September), this figure was 8.5% (including bonuses).
Wage growth has been affected by NHS and Civil Service one-off payments which were made in June and July and is the highest regular annual growth rate since comparable records began in 2001.
CPI inflation
The Consumer Prices Index (CPI) is a measure of inflation that tracks the overall price changes for a basket of more than 700 popular goods and services.
The triple lock uses September’s CPI inflation figure, which will be published in October, so we’ll have to wait until then before the state pension increase can be confirmed.
But inflation fell to 6.8% in July and this is the second month in a row that inflation has dropped.
The Bank of England predicts inflation will fall to around 5% by the end of this year, partly due to energy bills coming down in price.
As inflation is unlikely to measure more than 8.5%, it’s likely the earnings figure will be used to uprate the state pension, rather than inflation.
How much state pension could you get next year?
In 2023-24, the full level of the new state pension is £203.85 a week, or £10,600.20 a year.
If the state pension is boosted by 8.5%, this would mean the full new single-tier state pension would be worth £11,502.40 a year – a rise of over £902. This means those eligible would receive £221.20 a week (rounding up to the nearest 5p).
If you reached the state pension age before April 2016, you will qualify for the basic state pension.
The basic state pension currently pays £156.20 a week in 2023-24 or £8,122.40 a year. An 8.5% increase would mean the basic state pension would pay £8,814 a year in 2024-25 – a rise of over £691. This means those eligible would receive £169.50 a week (rounding up to the nearest 5p).
- Find out more:how much state pension will I get?
Is the ‘triple lock’ at risk?
In the 2022-23 tax year, the ‘triple lock’ was reduced to a ‘double lock’ to address a quirk in wage growth following the Covid-19 pandemic.
Earlier this month Rishi Sunak told ITV the government was committed to its policy on the triple lock.
The table below shows how the triple lock has boosted the state pension since it was introduced.
- Find out more:how do I qualify for state pension?
How to check your state pension forecast
The state pension is paid when you’ve reached state pension age. This is currently age 66 for women and men, but it’s due to increase in the coming years.
The amount you get depends on how many National Insurance Contributions (NICs) you’ve made during your working life.
You’ll need at least 35 qualifying years of contributions to qualify for the full new state pension, and at least 10 years’ worth to get anything at all.
You can use the government tool to check your state pension forecast, which will tell you how much you can get, when you can start receiving payments and whether you’re able to increase them.
If you reached state pension age before April 2016, you’ll need 30 years of contributions to get the full basic state pension.
- Find out more:your state pension forecast explained
