Retirees set for 8 per cent pensions boost as Rishi Sunak commits to keeping

• Latest figures show annual growth in earnings is currently around 8 per cent 

Retirees are set for an 8 per cent boost to their pensions after Rishi Sunak tonight committed to keeping the ‘triple lock’ in place.

Under the Tories‘ manifesto pledge, the state pension rises each April by whatever is highest out of average earnings, prices, or 2.5 per cent.

Latest inflation data revealed the headline Consumer Prices Index (CPI) rate dipped last month to 6.8 per cent.

But pensioners remain on course for a larger increase after figures showed annual growth in employees’ average total pay, including bonuses, was 8.2 per cent between April to June.

The figure was 7.8 per cent when excluding bonuses.

It means Chancellor Jeremy Hunt is likely to have to find billions of pounds more for state pension rises than previously thought.

The Prime Minister this evening insisted he was comfortable with a state pension rise of around 8 per cent next April.

Asked if he was committed to the pensions triple lock, Mr Sunak told ITV News: ;Yes, I always seem to get asked this in the summer, of course the Government is committed to its policy on the triple lock.

‘Now there is a statutory, a legal, process for determining the increase in pensions and benefits that happens in the autumn and that’s where those final decisions are made.’

Pressed on whether he was uncomfortable with a large rise in pensions, the PM added:  ‘No, I think the most important thing is that we continue to bring inflation down more generally right.

‘But while inflation is higher than we’d like, I also believe it’s right to step in and help people with the pressures that it brings.

‘That’s why the Government has paid around half of the typical family’s energy bill.

‘I think they probably haven’t – people haven’t quite appreciated the scale of that support.

‘It’s on a scale like furlough was, actually, and if you think about it in terms of what they want its cost, a typical family has received about £1,500 of help without maybe realising it on their energy bill.’

Next April’s rise in the state pension will be calculated using inflation data from September, published in mid-October, and average earnings growth from May to July this year, which will be known next month.

Steve Webb, a former pensions minister, said it was likely that Mr Hunt would need to find £2 billion more for pensions than he had anticipated in March, when the Chancellor’s spring Budget anticipated a 6.2 per cent hike. 

The base state pension rate is currently worth £203.85 per week. So an increase in line with 7.8 per cent wage growth would lead to a £15.90 weekly rise next spring.

This April, the application of the triple lock saw retirees given a 10.1 per cent increase to match inflation.

When Mr Sunak was Chancellor, he oversaw a one-year ‘suspension’ to the triple lock due to distortions to wages during the Covid crisis.

Pensioners had been on course for a rise of around 8 per cent in 2022-23 based on earnings data.

But the suspension of the triple lock saw retirees only get a 3.1 per cent rise in April 2022 to keep in line with inflation.