The state pension looks set to rise by over £400 next year as upcoming labour market data is expected to show it will increase in line with average earnings as part of the triple lock.

It is being reported that the data will show that average wage rises will be higher than the inflation measure used for the triple lock.

According to the BBC, the Treasury expects that the state pension will rise my more than £400 a year in April.

The triple lock ensures that the state pension rises by whichever measure if highest of inflation, average earnings increases, or 2.5 per cent.

“Strong wage growth looks set to deliver a boost of over £400 to pensioner’s pockets,” commented Hargreaves Lansdown head of retirement analysis, Helen Morrissey.

“It’s a much smaller increase than those we’ve seen in recent years, but remains comfortably above inflation, so will give retirees some much-needed breathing space in budgets.”

However, Morrissey warned that there were “a few flies in the ointment”.

“For many pensioners, this increase will need to be offset by the removal of the winter fuel payment,” she noted. “Only those on pension credit will now receive it, and this will amount to a gap of up to £300 this winter.

“Meanwhile, those on pension credit will be wrestling with the fact they won’t be receiving a cost-of-living payment this November. Last year they had a £300 payment to help take some of the pain out of winter energy bills, so losing this will take a toll.

“The timing of the rise is also unhelpful for pensioners struggling to make ends meet over the winter. The promise of a spring boost will bring cold comfort to those who are making difficult decisions about whether they can afford to heat their homes in the colder months.”

Furthermore, even when the state pension increase arrives, frozen tax thresholds are bringing the state pension closer to tax-paying territory, with the increase taking the full state pension to around £12,000 next year.

“With the freeze expected to remain in place until 2028, there’s every chance we could see the state pension become taxable in the near future,” Morrissey explained.

“As we head towards the Autumn Budget, rumours have also surfaced suggesting that the government might look to means-test the state pension in a bid to save money.

“The situation is certainly challenging, as increasing longevity has contributed to a burgeoning bill. We’ve seen previous governments increase the state pension age in a bid to contain these costs, but there’s only so far these increases can go, given people can only work for so long.

“The rumours will cause an enormous amount of worry, because the state pension forms a vital part of pensioner incomes.”

Quilter head of retirement policy, Jon Greer, argued that the sustainability of the triple lock for the long term was “questionable”.

“It remains a contentious issue in pension policy, with no government willing to make drastic changes due to the potential backlash from a core voter base,” he said.

“Given recent changes to winter fuel payments which spurred immediate calls for a rethink due to the number of people who will struggle to pay their bills this winter as a result, any alterations to the triple lock by Labour seem entirely remote and more so given Rachel Reeves’ recent confirmation that it would stick by the policy.

“A system more closely aligned with average earnings might be more cost-effective and better reflect the nation’s overall prosperity.

“While the anticipated uplift in the state pension is positive news for pensioners, it is essential to consider the broader implications and sustainability of the triple lock policy.

“The government’s pension review will latterly look at pensions adequacy which must consider both state and private provision. Perhaps the review will be the mechanism to start the journey for change that removes the politics from the triple lock.”

---