People born in certain years are set to see a significant increase in their state pension from the Department of Work and Pensions (DWP), amounting to more than £600 a year.
DWP's Triple Lock System
This early rise is attributed to the Triple Lock mechanism, which will increase the state pension by 5.7% next year, translating into an extra £605 a year for each pensioner.
Introduced in 2016, the new state pension scheme applies to all men born after 5 April 1951 and all women born after 5 April 1953.
According to recent calculations, all State Pension recipients will benefit from this annual increase of £605, thanks to the Triple Lock.
Under this system, the Department for Work and Pensions (DWP) gradually increases the state pension each year. The increase is determined by the highest of the following three factors: inflation, wage growth, or a minimum of 2.5%.
The latest Consumer Price Index figures, which influence the inflation component of the triple lock, indicate a likely monthly increase of 5.7% for pensioners.
As a result, the new full state pension will be £233.80 a week, £935.20 every four weeks and £12,157.60 a year for the 2025/26 financial year, an increase of around £605 a year.
Steven Cameron, pensions director at Aegon, commented: ‘For the April 2024 increase, income growth in 2023 resulted in an 8.5% increase which beat inflation. In April 2023, a surge in inflation the previous year led to a record 10.1% increase in the state pension.
These substantial increases and the high volatility inherent in both price inflation and income growth have raised serious questions about the long-term affordability of the state pension, which is funded by current workers through National Insurance contributions."
Future Projections
Cameron also said that with inflation now below the 2.5% threshold, revenue growth is likely to determine the increase in the Triple Lock for next year. Recent data shows revenue growth of 5.7% for the period January to March 2024.
"The specific figure for Triple Lock will be the year-on-year revenue increase for the period ending May to July 2024, which will be published in September.
Unless there is a significant fall in revenue growth over the next few months, this figure will likely set next year's triple lock,’ Cameron added.