Pensions are set to rise in April next year as the Government is facing an extra £100 million bill following revised figures published on Tuesday, a former pensions minister has said. Under the triple lock guarantee, the state pension increases every April in line with whichever is the highest of earnings growth in the year from May to July of the previous year, CPI (Consumer Prices Index) inflation in September of the previous year, or 2.5%.
With inflation running at more subdued levels, it is thought that wages will determine next year’s state pension increase. Last month, Office for National Statistics (ONS) figures indicated that total pay had increased by 4.0% annually in the three months to July.
But when jobs data was released on Tuesday, the ONS had revised the figure up to 4.1%. Sir Steve Webb, a former Liberal Democrat pensions minister, said the extra 0.
1% could add around £100 million to the state pension bill. Sir Steve, who is now a partner at consultants LCP (Lane Clark & Peacock) said: “A slightly higher rate of increase is welcome for pensioners, though will be an unwelcome £100 million extra cost for the Chancellor as she prepares her Budget. “The rate of the new state pension will now be close to £12,000 per year, very near to the £12,570 tax-free personal allowance.
This is likely to put extra pressure on the Chancellor to take action on tax allowances in the coming years.” Recommended Reading: Thousands of people ‘only receiving fraction of.
