Millions of older pensioners are expected to receive a smaller increase in their state pension next April. Under the triple lock, state pensions rise each April by the highest of inflation, wage growth, or 2.5%.
Latest labour market figures show that average earnings grew by 4.7% in the three months to July, outpacing inflation at 3.8%. This means state pensions are likely to rise by 4.7% next year, once confirmed by the Government in the autumn Budget. For those on the full new state pension, weekly payments could increase from £230.25 to £241.05, boosting annual income by £561.60 to a total of £12,534.60. By contrast, the full basic state pension could rise from £176.45 to £184.75 per week, delivering an annual increase of £431.60.
This represents a shortfall of around £130 a year for recipients of the basic state pension compared to those receiving the full new state pension.
The basic state pension applies to men born before April 6, 1951, and women born before April 6, 1953. That means men in this group are now at least 74 years old, and women are at least 71.
It should be noted that many who receive the basic state pension also qualify for an “additional” state pension, also known as the State Earnings-Related Pension Scheme (SERPS). This increases every year based on inflation.
Subsequently, it’s claimed that in some cases, pensioners who receive SERPS can be better off than those on the new state pension. An analysis by Money Mail in 2024 showed that older retirees in their 80s and 90s can receive up to £20,176 annually, which is much higher than the new state pension rate.
However, the disparity in the main pension rates still means millions of older retirees will see a smaller pay rise compared with younger pensioners on the new scheme.
With around 12.7 million pensioners in the UK and an estimated nine million aged over 70, a significant proportion of older Britons are set to feel the impact of this difference in pension increases.
Steve Webb, partner at pension consultants LCP, and a former pensions minister, told Money Week: “It often comes as a surprise to people that the different elements of their state pension can go up at different rates.
“The famous ‘triple lock’ promise applies only to the old ‘basic’ state pension and the new flat rate pension, but not to other elements of the pension such as the state second pension (often known as Serps).”
Chancellor Rachel Reeves will confirm the new state pension rates in her autumn Budget on November 26.
