The state pension is expected to increase by 4.7% in April 2025, as official data reveals a significant surge in wage growth. However, the latest figures from the Office for National Statistics (ONS) also highlight a sluggish jobs market, with fewer job vacancies and a decline in the number of payrolled staff.
As the UK faces a cost-of-living crisis, pensioners will likely see a welcome boost. Yet, with the labour market showing signs of strain, this rise in pensions comes against a backdrop of growing economic uncertainty.
State Pension to See a Significant Increase
According to the latest data, the state pension is set to increase by 4.7% from April 2025. This rise comes as a result of the triple lock mechanism, which guarantees that the pension rises by the highest of three factors: inflation, wage growth, or 2.5%. With inflation forecast to be 4% in September, wage growth has emerged as the key driver for this year’s pension increase.
This means that the full state pension will rise to £12,534.60, surpassing the £12,000 mark for the first time. Although wage growth for the period from May to July was 4.7%, other figures, including those excluding bonuses, showed a slight slowing. The news of a pension increase will come as a welcome relief to many pensioners, particularly those grappling with higher living costs.
Struggling Labour Market
While wage growth appears to be holding steady, the broader labour market remains more concerning. Data released by the ONS reveals a reduction in job vacancies, which fell by 10,000 between June and August, marking the 38th consecutive period of decline. At the same time, the number of people on payrolls dropped by 127,000 year-on-year in August. This signals a less robust job market, one that is proving difficult for many looking to find new work.
Additionally, vacancies have fallen in nine out of 18 industries, further highlighting the challenges facing various sectors. While these figures paint a less optimistic picture, there is a bright spot in the form of the NHS, which continues to see a steady increase in employment, with over 2 million people now working in the sector.
The unemployment rate, meanwhile, remains at 4.7%, though the ONS has advised caution in interpreting the data, due to concerns over low response rates in the monthly surveys. With fewer people in work and an uncertain outlook for jobseekers, the labour market’s recovery will be a key area of focus for policymakers in the coming months.
