State pension to rise by over £400 next year

The Treasury expects the new full state pension to be boosted above inflation by more than £400 a year in cash terms.

The internal working calculations seen by the BBC reflect the near certainty that the state pension will be increased by average earnings figures released next week.

This is due to the triple lock, which means the state pension increases every April by whatever number is highest out of inflation, the average UK wage increase, or 2.5%.

The news comes as the government faces a backlash over its decision to cut the winter fuel payment for most pensioners.

Given that millions of people will lose the payment, the overall increase in their income is likely to be £100 or £200.

The increase will take the full state pension for men who were born after 1951 and women born after 1953 to around £12,000 next year, after a £900 increase last year.

Pre-2016 retirees, who may have been eligible for a secondary state pension, are likely to see at least a £300 a year increase in the basic state pension to £9,000 in next year under the old system.

The final decision on the uprating will be made by pensions secretary Liz Kendall ahead of the Budget next month, but on Monday Chancellor Rachel Reeves reiterated the government’s backing for the triple lock until the end of this parliament.

The commitment is an expensive election promise on the £130bn a year state pension bill made by all the main parties.

Under the triple lock system, the state pension rises each April in line with whichever of these three measures is highest:

• inflation, as measured by the Consumer Prices Index (CPI) in the September of the previous year

• the average increase in wages across the UK

• or 2.5%

The triple lock was introduced by the Conservative-Liberal Democrat coalition government in 2010.

It was designed to ensure the value of the state pension was not overtaken by the increase in the cost of living or the working population's income.

The government has been keen to point to the above inflation generosity of the triple lock after its decision to scrap the winter fuel payment for most households.

Campaigners and opposition parties say not enough is being done to help hundreds of thousands of pensioner households, especially in rural areas, who live below the poverty line, yet will still lose their winter payment.

Former pensions minister Sir Steve Webb has said 1.6 million older people living in poverty could be at risk of being stripped of their winter fuel payments.

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