The state pension looks set for a rise of about 4.1 per cent from April, according to personal finance columnist Jeff Prestridge, once the Office for National Statistics (ONS) publishes its latest earnings figures on Tuesday.
Prestridge said the increase would take the full state pension from £241.30 a week to about £251.20, roughly £10 a week more for those on the full rate.
Pensioners who retired before April 2016 and remain on the old state pension would see their maximum weekly payment rise from £184.90 to about £192.50, Prestridge said. He described the resulting two-tier system as an issue no government, least of all a Labour one, is likely to tackle.
How the Triple Lock Works
Tuesday's earnings figures feed into the triple lock, the mechanism introduced in 2010 that guarantees pensioners an annual rise in line with whichever is highest out of inflation, average earnings, or 2.5 per cent. Prestridge noted that inflation currently sits below 3 per cent, meaning earnings growth would determine April's increase.
The prediction follows a column Prestridge wrote last week on the state pension, which prompted many readers to argue that other areas of government spending should be tackled before pensioners face any cuts to their entitlements.
Calls to Scrap or Reform the Lock
Prestridge said the triple lock has faced a sustained campaign from critics who call it unaffordable, a position he strongly rejected. He warned that such arguments could gain ground given what he described as the state of the economy under the current Labour government.
Seven days ago, the British Chambers of Commerce called for the triple lock to be scrapped in favour of an annual increase linked to inflation, with the savings used to cut National Insurance bills for people under 25.
The Institute for Fiscal Studies has also renewed its call for reform, saying a government will eventually have to move the state pension "towards a more predictable and less costly way of uprating." The think tank pointed to Australia, where the state pension rises with average earnings over the long term but can be increased more sharply if inflation spikes.
Radio 4 Debate on the Lock's Future
BBC Radio 4 devoted 40 minutes of its Today programme to a debate on the triple lock's future a few days ago, chaired by presenter Nick Robinson. Two panellists argued for keeping the lock and two against it. Prestridge described the discussion as measured and free of bias, with no clear winner, but said the amount of airtime given to the topic showed how precarious the lock's future is.
John Redwood's Case for Keeping the Lock
Prestridge said he sides with John Redwood, a former Conservative minister who was his local MP until two years ago. Redwood has argued that Chancellor Rachel Reeves' decision in April last year to raise National Insurance costs for employers, while damaging to some UK businesses, has strengthened the finances of the National Insurance fund that pays for state pensions.
According to Redwood, the fund can now afford state pensions plus any triple lock increases while still building a "large and growing cash reserve," which he said makes the triple lock affordable.
Political Backdrop
Prestridge's comments come after Prime Minister Andy Burnham told the House of Commons that social security spending was a greater national priority than protecting the country from threats posed by what he called an emboldened axis of evil, a remark Prestridge said had alarmed him.
Prestridge said the Chancellor may address the triple lock's future in the Budget, expected late next month.
