The state pension is expected to increase by a larger amount than initially projected following a revision of a crucial figure used in the triple lock mechanism.
The triple lock ensures that the state pension rises each April based on the highest of earnings growth between May and July, inflation in September, or a minimum of 2.5%.
Initially, wage growth from May to July was believed to be 4.7%, but a recent update by the Office for National Statistics (ONS) revised this figure upward to 4.8%.
With inflation currently at 3.8%, it is likely that the wage growth figure will be utilized for the triple lock. Economists anticipate that the next inflation data set to be released this week could rise to 4%, marking its highest level in 21 months.
According to analysts at Hargreaves Lansdown, this adjustment means the full new state pension could potentially increase from £230.25 per week to £241.30 in April 2026. Similarly, the old basic state pension might rise from £176.45 per week to £184.90.
It is important to note that the actual amount of state pension one receives may vary depending on their National Insurance contributions.
The eligibility criteria for the new state pension require 35 qualifying years for most individuals born on or after April 6, 1951. Conversely, those born before this date may be entitled to the older basic state pension, with the number of qualifying years varying based on birth date and gender.
For instance, men born before April 6, 1945, need 44 years of National Insurance contributions, while those born between 1945 and 1951 require 30 years.
Currently set at 66 for both men and women, the state pension age is scheduled to gradually increase to 67 between 2026 and 2028, followed by a further rise to 68 in the mid-2040s.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, commented on the revised figures, stating that individuals receiving state pension can anticipate a slight increase in their payments from next April. The full new state pension may rise to £241.30 per week, while the full basic state pension could increase to £184.90 per week.
While awaiting the final inflation figures, which are crucial to the triple lock calculation, the prevailing 3.8% inflation rate suggests that average wages are likely to be the determining factor.