The state pension is set to rise by £460 a year from next April, after the latest labour market data revealed that average wages including bonuses rose by 4 per cent over the past year.

Under the triple lock, the state pension increases by whichever is the highest of consumer-prices index (CPI) inflation, average wages and 2.5 per cent.

Industry experts have said that inflation is unlikely to outstrip this wage figure, meaning that the full basic state pension is set to rise from £8,814 to £9,167 per year, while the new state pension is set to rise from £11,502 per year to around £11,962 from next April.

Quilter head of retirement policy, Jon Greer, said that the news that the triple lock is likely set to increase the state pension by 4 per cent provides a “significant boost” to pensioners.

However, Royal London warned that savers may not be getting as much as they are entitled to, with recent data obtained by Royal London revealing that only half of the 3.5 million recipients of the new State Pension were paid the full weekly amount of £203.85 last year, due to gaps in their National Insurance record.

And even for those who are in receipt of the full state pension, Hargreaves Lansdown head of retirement analysis, Helen Morrissey, warned that, despite the boost, “there’s every chance it’s not enough to placate those pensioners still reeling from the loss of the winter fuel payments, especially given how close this is edging to busting the personal allowance”.

“The loss of the winter fuel payment will be especially keenly felt by older pensioners on the basic state pension who receive larger payments, but have seen a smaller increase in their state pension as they are not on the new flat rate pension,” she continued.

“Life is also tougher for those who get pension credit and the winter fuel payment, who won’t be getting a cost-of-living payment this November.”

Broadstone head of market engagement, Simon Kew, agreed, stating: “While this will cushion the blow to many following the means-testing of winter fuel payments, the coming increase to energy bills and sustained rises in the cost of living since the pandemic will still be squeezing pensioners’ budgets."

At the same time, Morrissey pointed out that the increase will take the full state pension to just shy of £12,000 next year, closing in on the £12,570 personal allowance.

“Given that the freeze to this threshold is expected to remain in place until 2028, it raises the spectre of the full state pension alone taking pensioners over it and into the realms of paying income tax during the next few years,” she said.

“If pensions are rising with price inflation at the point when the state pension eventually breaches the personal allowance, once tax is taken into account, retirees who get just the state pension will actually be worse off in real terms.

“Pensioners are already asking whether they should be in the frame for filling the gap in the public finances, and this isn’t going to quell their concerns.”

The rising cost of the triple lock has also prompted broader funding concerns, as Kew warned that questions around the long-term sustainability of the state pension are only likely to intensify as the bill to the Chancellor of the Exchequer increases amid an expanding pensioner community.

Indeed, Greer also noted that, with the government preparing for difficult decisions, many will be worried that the triple lock policy might be next on Rachel Reeves’ chopping block.

“Following the controversy over limiting winter fuel payments to low-income pensioners, it seems unlikely that the triple lock will be altered in the short term,” he clarified, admitting however, that its sustainability remains a key issue over the longer-term, as it provides a boost to pension incomes, relative to earnings, only when the economy is struggling.

“This coupled with the pressure of a larger pensioner population will put a strain on the public finances; balancing pensioner welfare with other needs is becoming more challenging, and reform appears inevitable eventually,” he said.

“However, this politically charged area might be one difficult decision too many for Labour this early in their tenure.”

Given this, and with the government’s upcoming pension review examining the adequacy of both state and private pensions, Greer suggested that "this could be the moment for a balanced, long-term strategy that aims to get cross-party support".

“A consensus on the appropriate level of the state pension and a fair mechanism for maintaining its value over time is essential to prevent annual increases from becoming political flashpoints," he added.

“While the 4 per cent increase is positive for pensioners, the broader conversation on the triple lock’s future must continue. The upcoming review may be key to finding a sustainable path forward that depoliticises the process and ensures fairness across generations.”

This was echoed by Morrissey, who said: "We need to see the state pension and the triple lock’s role form part of the government’s pension review, so pension provision can be assessed in a holistic manner that puts the state pension on a sustainable footing long term.

"People need certainty of what they will receive from the state – and when – in order to make sensible plans for their retirement.”

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