The State Pension will rise by 8.5% in April 2024, honouring the government’s triple lock guarantee, Chancellor Jeremy Hunt confirmed in his Autumn Statement.
The Chancellor said pensions will increase by 8.5%, based on average earnings data published in September. It means pensioners will receive £221.10 a week, or £11,502.40 per year, around £900 more a year.
It follows the previous year’s 10.1% boost, which saw the 2023/24 state pension rise to £203.85, in line with record high inflation.
The triple lock guarantee means the government is committed to raising the state pension by whichever is highest out of earnings, inflation or 2.5%. But while it has benefited pensioners, the recent rises have sparked debate around the policy’s long-term sustainability.
Jon Greer, head of retirement policy at Quilter, said: “Tinkering with the triple lock measure will be something the government would have been loath to do given it will upset the Conservative party’s core voters. Being able to announce they are keeping the measure as is today will therefore represent a boon for Hunt and Sunak.
“However, once again the triple lock and all its problems gets punted down the road for the next government to think about. There is a growing problem with the state pension and it’s unfortunate but not unsurprising that this government has not opted to make long term but potentially unpopular decisions about reforming how our state pension is uprated.”
Greer said the potential reform of how the state pension is calculated requires a “delicate balance” between protecting the income of retirees and ensuring the long-term sustainability of the pension system.
He explained: “The triple lock has been crucial in safeguarding pensioners’ income. However, this system can be financially unpredictable and may not be sustainable in the long run. A more sustainable approach could involve linking pensions to a fixed percentage of average earnings. This method would align pension increases with the economic prosperity of the country, ensuring that pensioners’ incomes grow in tandem with the working population.
“It also offers more predictability for budgetary planning and could be perceived as a fairer system, especially for younger generations who currently contribute to the pensions of retirees. Transitioning to such a system, however, would require careful consideration and planning to protect current retirees while laying a sustainable foundation for future generations so it is unsurprising but disappointing that Hunt has not tackled this issue.”
