Millions of pensioners could get a massive £869 state pension increase next year as wage growth soars

Economy
By Liam

Millions of pensioners could get a massive £869 state pension increase next year as wage growth soars

  • Pensioners expect an increase to around £11,500 a year if the trend continues
  • Another big increase would follow last year’s 10.1% bumper increase

By Ryan Prosser

published: | Updated:

Millions of pensioners could receive an increase in their state pension next year to the tune of £869.

Experts predict that rising wages will be the main factor determining how much the state pension will rise in April 2024.

The AOW will rise in line with September wages, inflation or 2.5% – whichever is higher – under the so-called ‘triple lock’.

With ONS statistics showing an 8.2% salary increase including bonuses for the months of April to June this year, experts believe a £869 bonus is on the cards if this trend continues.

This means that pensioners would get £220.55 instead of £203.85 per week.

Below the triple lock, the state pension increases with whatever the highest figure is in September wages, inflation or 2.5%

The increase from the current figure of £10,600 to the predicted £11,500 a year would be a welcome boost to many hit by skyrocketing household bills.

How much is the state pension?

The full state pension is £203.85 per week or £10,600 per year. An 8.2 per cent increase would raise it to around £220.60, or £11,500.

People who retired on a full basic pension before April 2016 will now receive £156.20 a week or £8,120 a year. This would add up to about £170 a week, or £8,800.

The old basic rate is supplemented with additional AOW entitlements – S2P and Serps – if these have been earned in working years.

People who have outsourced S2P and Serps to pay less National Insurance over the years and retire after April 2016 may receive less than the full new state pension.

July’s inflation numbers, to be released tomorrow, give us an indication of what September’s could look like.

Inflation is currently forecast to fall to 7%, down from the current level of 7.9%, the sun reported.

According to figures released in October, the increase in state pension next year will be determined on the basis of wages, which will then be the highest figure.

However, the boost would stay below last year’s 10.1% bumper increase.

But the increase would be 2% higher than the 6.2% increase predicted by the Office for Budget Responsibility at the time of the March 2023 budget.

It could mean a further £2bn going into the account of the Department for Work and Pensions, former Pensions Minister Steve Webb said.

Jon Greer, head of pension policy at Quilter, said it was unlikely the government would go back on its promise to keep the triple lock, despite the huge cost.

As well as next year’s state pension increase, millions can also expect a £150-£300 top-up to their winter fuel payment.

People receive the state pension according to the number of years they have paid national insurance contributions.

Those with at least 35 years of eligible payments may be entitled to the maximum amount.

Some links in this article may be affiliate links. If you click on it, we may earn a small commission. That helps us fund This Is Money and use it for free. We do not write articles to promote products. We do not allow any commercial relationship to compromise our editorial independence.

You might also like More from author