Each year the State Pension increases by the greater of CPI inflation, average wage growth or 2.5%. This is the so called “Triple Lock”, designed to help pensioners’ income keep pace with rising prices and wages generally.
The CPI figure used for the increase is from September each year, and the increase takes effect from the following April. This year, CPI was 1.7% in September. However, the average wage growth was 3.9% and therefore, being the higher figure, this will be used to increase the State Pension next April.
Whilst this is great news for pensioners, it puts further strain on the Treasury to meet the rising cost of the already enormously expensive benefit. One wonders for how long such increases can continue, although it will be a brave government to remove the triple lock.
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