UK Chancellor Jeremy Hunt today confirmed the state pension will increase by 8.5% from April next year as the government continues to back the triple lock policy.
The ‘triple lock' is a commitment to increase the state pension by whichever is highest of average earnings growth, Consumer Prices Index (CPI) inflation, or 2.5%.
Hunt confirmed the state pension will increase by 8.5% in April in line with earnings. This follows a 10.1% increase in line with CPI inflation the previous year.
The triple lock is seen as unaffordable by some commentators and policymakers, however, the government said today it would retain the policy.
Addressing MPs in the House of Commons, Hunt said: "Triple lock has been a lifeline for many during a time of high inflation. Today we honour our commitment."
Hunt said the 8.5% increase would mean pensioners get £221.20 per week, an increase worth about £900 a year. He said the move showed the Conservative government would "always back our pensioners".
Standard Life managing director for retail direct Dean Butler said: "There will be no fiddling with the triple lock formula this year as the Chancellor confirmed his intention to offer those in receipt of the state pension the full 8.5% due as a result of increases to average earnings. There had been some speculation that we may see a reduced offer of 7.8% to reflect the fact that some of the earnings growth was due to a one-off payment to public sector workers.
"The last couple of years have seen exceptionally large increases applied to the triple lock as a result of inflation and wage growth and questions surrounding the growing cost remain. A proposed review of the state pension was pushed out earlier this year reflecting the highly sensitive nature of the policy this side of an election."
