Pensioners will be handed an extra 4.1% per annum via the state pension in April 2025, thanks to the ‘triple lock’.
The triple lock is a government policy which means that the state pension increases every April in line with whichever is the highest of:
- CPI (Consumer Prices Index) in September the year before;
- the average increase in total wages across the UK for May to June of the previous year; or
- 2.5%
The earnings figure has just been revised upwards following some new employment data released in October which means the final number has moved from 4% to 4.1%. This is the highest of the three figures and will be used for the state pension from April 2025 assuming nothing else changes. The cost of the extra 0.1% is estimated at £100m.
The triple lock was introduced in 2010 by the coalition government and Rachel Reeves promised to keep it as part of Labour’s manifesto. It was suspended once in 22/23 for exceptional circumstances when inflation figures were warped by Covid and furlough influenced earnings figures, so the government temporarily removed the earnings measure from the equation to help with Treasury finances. The triple lock went back the following year to deliver a 10.1% state pension increase.
It has attracted criticism due to the cost to the tax payer, and because other benefits do not enjoy similar ‘highest of’ protections. Universal Credit, Housing Benefit, Maternity Allowance and Statutory Sick Pay, for example, are usually tied to September’s CPI figure alone so an increase of just 1.7% is likely for those benefits.
Assuming it is ratified the state pension will change from:
- £221.20 a week to £230.30 a week for the full, new flat-rate state pension, external (for those who reached state pension age after April 2016)
- £169.50 a week to £176.45 a week for the full, old basic state pension, external (for those who reached state pension age before April 2016)
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