The state pension is likely to increase by 8.2 percent after data revealed wage inflation has significantly increased between May and July.
The full rate state pension could top £220 a week if earning growth sticks at the current rate, with sources claiming it’s unlikely the Government will break the triple lock pledge ahead of an election.
The state pension already rose by 10.1 percent in April, with the new figures published by the Office for National Statistics (ONS) fuelling speculation that another increase is on the cards.
The triple lock pledge means the state pension should increase every year by the highest of price inflation, average earnings growth or 2.5 percent.
Wage inflation including bonuses was 8.2 percent from May to July, while CPI inflation was 7.9 percent in June.
Former Pensions Minister Steve Webb told This is Money: “Today’s new figures on average earnings growth suggest that next year’s state pension rise could easily be 2 percent higher than expected by the Chancellor at the time of the Budget.
“It seems very likely that the pension rise implied by the triple lock policy will be much higher than expected at the time of the March 2023 Budget.
“Although inflation is coming down, the rate of average earnings growth has been heading upwards and is likely to be the key factor in determining next year’s state pension rise.
“An extra £2billion bill arising from higher than expected earnings growth seems quite plausible. But it is unlikely that this would lead the government to break the triple lock, especially in the run-up to a likely 2024 general election.”
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “We may not see the eye-wateringly high increase in state pension that we saw last year but something in the region of seven percent is not out of the question.
“This would push up the full new state pension to more than £11,300 per year – if we were to see an increase in the region of 8.2 percent it would go up to around £11,470.”
The full new state pension is currently £203.85 a week while the full basic state pension is £156.20 a week.
Steven Cameron, pensions director at Aegon, said: “If earnings growth remains above price inflation in the coming months, state pensioners may be winners, particularly as they are less likely to be affected by rocketing mortgage costs and could also be benefiting from higher interest rates on cash savings.”
