State pension will probably increase by 4.7% next year

People who draw their new state pension from April will probably see an increase of more than £ 500 a year, suggests the last wage data.

According to the “Triple Lock” policy, the State Pension goes up every year by 2.5%, inflation or average profit growth – depending on which the highest figure is.

The Office for National Statistics (us) unveiled the total wage, including bonuses for the three months to July, was 4.7%, which is probably the figure used for the annual increase.

Almost 13 million people currently receive the state pension.

The new wage figures for us probably means:

• The new fixed speed pension – for those who have reached the state pension after April 2016 – is expected to increase to £ 241.05 a week. That brings it up to £ 12.534.60 per year, an increase of £ 561.60 compared to now.
• The old basic pension – for those who have reached the state pension -entitled age before April 2016 – is expected to go up to £ 184.75 a week. It costs £ 9,607 per year, an increase of £ 431.60 compared to now.

With the prediction of inflation in September 4%, it is likely that the average profit growth from Tuesday will be used to determine the increase in the state pension.

Sir Steve Webb, partner at Pension Consultants LCP and former pensions minister, said that the standard rate of the new state pension is “increasingly closer to the frozen personal tax allowance”, which is currently £ 12,570 and stays at the same level until 2028.

The standard personal reimbursement is the amount of the income that is permitted each year without paying taxes.

Sir Steve said that someone without other income, apart from the new state pension, will become a taxpayer in April 2027.

“It is already the case that almost three -quarters of all pensioners pay income tax, and the continuous freezing of tax thresholds in combination with steady increases in the pension will increasingly drag to the tax network,” he added.

Linda, a retired hairdresser from Wokingham, told the BBC that she was worried that her state pension was pushed to the tax threshold.

“They give it on the one hand and it is removed in the other, so that’s no hope,” she said.

“If they could increase the tax threshold, this would make a huge difference”.

The pensioner said she would have trouble managing the state pension if she lived alone.

“I am lucky that my husband has a good retirement, so we have a fairly reasonable lifestyle, but when I am left alone, I don’t know what would happen to be honest.”

According to us, regular wage growth – excluding bonuses – fell to 4.8% in the three months to July, at 5% in the previous three months and the lowest since May 2022.

Liz McKeown, the us director of economic statistics, said that salary increases “remained strong due to historical standards”, despite the fact that it came further in cash.

Yael Selfin, chief economist at KPMG, said that the profit growth “would probably continue to fall in the coming year”.

“The demand for employees has fallen sharply as a result of a combination of weaker economic activity and companies that are confronted with higher labor costs. As a result, we expect wage growth to fall below 4% by the end of the year,” she added.

Not all pensioners receive the entire state pension because it depends on years of qualifying contributions through the national insurance system.

For many retired people, the state pension is not their only source of income, because they also receive money from the workplace or private pensions.

The state pension is the second largest item in the government budget after health expenditure.

The conservative-liberal democratic coalition designed the triple lock in 2011 to ensure that the value of the state pension was not overtaken by the increase in the costs of living or the income of working people.

But there has been an intense debate about the costs of the triple lock and whether it is justified, in which chancellor Rachel Reeves previously promised that the Labor Government would keep it until the end of the current parliament.

In July, the government’s official predictor said that the costs of the triple final guarantee at the end of the decade would be three times higher than originally expected when it started.

The last us -data also revealed that the British unemployment rate hit at 4.7% in the three months to July, a level that has not been seen since May 2021.