Prime Minster Rishi Sunak has committed to retaining the state pension triple-lock after earnings growth exceeded 8% in June.
Figures released on 15 August showed that in the three months to June earnings growth spiked to 8.2% higher than CPI inflation currently standing at 6.8%.
If the earnings growth figure is repeated in July and used for the triple lock this would mean an increase in the new state pension from £203.85 to £220.55 per week.
Tom Selby, head of retirement policy at AJ Bell, said: “Retirees will be breathing a huge sigh of relief after Rishi Sunak confirmed the government will stick to its state pension triple-lock pledge.
“We will need to wait for July’s earnings figures to come through to know exactly what this means, but if the 8.2% growth we saw in June is repeated, that would increase the full flat-rate state pension to over £220 per week, or almost £11,500 per year.
“A central problem with the triple-lock is that it is a policy without a clear goal as things stand, randomly ratcheting up the value of the state pension in real terms whenever inflation and earnings growth are below 2.5%. It also leaves the government exposed to spikes in inflation or earnings, a flaw which has been brutally exposed in recent years.
“What savers of all ages need from the government is stability when it comes to state pension policy. Ideally, that would come through cross party agreement on how much income the state pension should provide in retirement and how much of someone’s later years should, on average, be spent in receipt of the state pension.
“Serious consideration should also be given to develop smoothed earnings and inflation measures which can then be used to deliver less volatile annual increases.”
