State pensions will rise by £460 to £11,960 in April as millions of people lose their winter fuel payments

Older people will get a £460-a-year increase in their state pension next spring, to around £11,960. This equates to a 4 per cent wage increase for the working population.

This means the full fixed state pension will be £230.05 a week, compared to the current £221.20.

The state pension is increased each year by the higher of inflation, average wage growth or 2.5 percent, under the ‘triple lock promise’ to pensioners.

The Labour government promised at the recent election to maintain the ‘triple lock’ for the entire current parliament.

The key wage growth figure used in the calculation is total wages including bonuses in the three months to July, which was published today and was 4 percent.

The crucial CPI inflation figure is from September and will be published in October.

But when determining the AOW, this percentage will almost certainly not play a role this time: it is now only 2.2 percent.

The state pension was increased by 8.5 per cent last spring to £221.20 a week, or around £11,500 a year, for people who retired since April 2016 and are eligible for the full amount.

People who retired before April 2016 and were still receiving the old basic pension currently receive £169.50 a week, or around £8,800 a year.

A 4 per cent pay rise for them next spring will equate to around £176.30 a week, or almost £9,200 a year.

Those on this lower rate also get hefty supplements, called S2P or Serps, provided they were earned earlier in life. However, these are increased in line with inflation, not the triple lock.

Annual full state pension since 2021. Source: AJ Bell

The government has pointed to the threefold increase in the state pension as justification for its plan to abolish the winter fuel supplement for most pensioners.

Around 10 million pensioners are expected to lose their benefits, which amount to between £100 and £300 a year, before the next state pension increase in the spring.

The payments currently available to all retirees will be restricted to those who are eligible for pension credit or certain other benefits.

> How to apply for pension credit: Read a This is Money guide

The measure has sparked outrage among critics, who fear that people who are not eligible for pension credit or whose income is just above the qualifying threshold will face serious problems and health risks or even life-threatening dangers this winter.

Meanwhile, the government faces another challenge as the nominal amount of the state pension moves closer to the personal exemption of £12,570.

This is the level at which income tax is levied. Since 2021, this level has been frozen.

This creates a strange situation: the Department for Work and Pensions pays millions of people a state pension, some of which is then claimed back by the Treasury in the form of income tax. As a result, more and more people are having to file annual tax returns with HMRC.

Millions of pensioners already do this, because they receive a state pension of more than £12,570.

This is because, under the old system before 2016, they reached retirement age and had therefore built up sufficient second state pension (also known as Serps) to build up a more generous benefit during their retirement.

Meanwhile, more and more pensioners, who in addition to their state pension also receive a modest income from a private pension, also have to file a tax return.

“Sticking to the promise of a triple lock may save the government in the eyes of British pensioners,” said Rachel Vahey, head of public policy at AJ Bell.

‘The government is under increasing pressure to scrap its controversial decision to scrap winter fuel payments for all pensioners, except those claiming pension credit.

‘And while the state pension increase should help pay next year’s bills, it is no solution for those living on the edge this winter.

‘The triple lock guarantee has worked well for pensioners in recent times, with state pensions rising by 28 percent over the past four years.

‘But with the state pension inching ever closer to the frozen personal allowance of £12,570 and the concept of universal payment coming under increasing attack, at some point the government will have to take the bull by the horns and decide who is entitled to the state pension, at what age and how much.’

Alice Haine, financial analyst at Evelyn Partners, said: ‘The huge rise may come as a relief to pensioners still struggling with the impact of the cost of living crisis, but the heavy shadow cast by Labour’s promise to scrap the winter fuel supplement for all but the very poorest pensioners may make the news somewhat less appealing.

‘Add to that the frozen tax thresholds, the new full state pension edging ever closer to exceeding the standard personal allowance of £12,570 (the point at which all income is taxable), the potential loss of the winter fuel allowance and the threat of Housing Secretary Angela Rayner scrapping council tax relief for single-person households, and it’s clear why pensioners feel under siege.’