State pension set to rise by £460 next April

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The full state pension is set to rise by £460 from next April, according to official wage figures.

The Office for National Statistics (ONS) said total pay increased by 4% in the three months to July.

While this is the lowest increase for nearly four years, it will mean pensioners who reached state pension age after April 2016 can expect to see their full, flat-rate state pension go up to £11,962.60 a year from next April – a rise of £460.

Under the “triple lock” guarantee, the state pension increases every April in line with whichever is the highest of average total earnings growth in the year from May to July of the previous year, CPI inflation in September of the previous year, or 2.5%.

As inflation is not expected to be higher than wage growth, the wages figure is likely to be used for the calculation.

But the figures are subject to possible revisions in next month’s data and the Government will confirm the planned increase in the autumn.

Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, cautioned the rise in the state pension will only partially offset the pain for the millions of pensioners who are being stripped of their winter fuel allowance.

She said: “There’s every chance it’s not enough to placate those pensioners still reeling from the loss of the winter fuel payments, especially given how close this is edging to busting the personal allowance.”

(PA Graphics)PA Graphics

She warned the new annual pension is moving closer to the £12,570 personal tax allowance.

“Given that the freeze to this threshold is expected to remain in place until 2028, it raises the spectre of the full state pension alone taking pensioners over it and into the realms of paying income tax during the next few years,” she said.

The ONS data also showed that regular wage growth fell to 5.1% year on year over the three months to July, marking the lowest level since the quarter to July 2022.

With Consumer Prices Index inflation taken into account, UK workers saw their pay increase by 3%, down from 3.2% in the previous three months.

The ONS added that the rate of unemployment was 4.1% over the three months to July, dropping from 4.2% over the previous three months and marking the lowest since the three months to January.

(PA Graphics)PA Graphics

But vacancies fell once again, dropping by 42,000 quarter-on-quarter to 857,000 in the three months to August.

More real-time figures showed the number of payrolled workers fell by 59,000 between July and August to 30.3 million.

Liz McKeown, director of economic statistics at the ONS, said: “Growth in total pay has slowed markedly again as one-off payments made to many public sector workers in June and July last year continue to affect the figures.

“Basic pay growth also continued to slow, though less sharply.

“When taken together on a comparable basis, our different measures all show growth in the number of employees over the latest quarter, though annual growth has slowed over the year.”