The state pension is projected to rise by £460 annually starting in April 2025, according to recent wage data.
The increase comes under the “triple lock” system, which ensures the state pension grows each year by the highest of three factors: 2.5 percent, inflation, or average earnings growth. Official statistics reveal that total pay for the period between May and July increased by 4 percent, making this the likely figure to determine next year’s pension rise.
This anticipated increase coincides with widespread discontent over the government’s decision to cut the winter fuel payment for most pensioners. The new policy, announced by Chancellor Rachel Reeves, will introduce means-testing, resulting in more than nine million pensioners losing up to £300 this winter.
According to the latest data from the Office for National Statistics (ONS), the new full flat-rate state pension—available to those who reached state pension age after April 2016—is expected to rise to £230.05 per week, totalling £11,962.60 annually. This represents a £460 increase from the current rate. For those who reached state pension age before April 2016, the full basic state pension is expected to rise to £176.30 per week, or £9,167.60 annually, an increase of £353.60. However, not all pensioners receive the full state pension.
The final pension figures will be confirmed by Work and Pensions Secretary Liz Kendall around the time of the Budget, and could change if official earnings data is revised next month.
Matching rising prices
Steve Webb, former pensions minister and partner at pension consultancy LCP, noted that a portion of the increase is necessary to match rising prices. With inflation at 2.2 percent, Webb explained that the new state pension would need to rise by just over £250 to maintain its current value. He added that while the above-inflation increase of £460 is welcome, only £210 of this amount represents a real increase in pensioners’ purchasing power. Webb also highlighted that many pensioners will still face a net loss, particularly those affected by the reduction in Winter Fuel Payments.
The ONS data also showed a slowdown in total pay growth, which includes bonuses, dropping from 4.5 percent in the previous month to 4 percent. This decline is attributed to one-off bonuses paid to NHS and civil service workers in June and July 2023, which were not repeated this year. Regular pay growth, excluding bonuses, also slowed to 5.1 percent.
In the same period, the unemployment rate decreased slightly to 4.1 percent, marking the lowest rate since January 2024. Job vacancies also fell by 42,000 to 857,000 between June and August, reaching the lowest level in more than three years, though still higher than pre-pandemic levels.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
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