As this figure is likely to exceed both inflation and the 2.5% floor of the ‘triple lock’ formula, this means that the state pension is set to rise by 4.8% next April, giving a welcome boost to millions of pensioners next April.
Steve Webb, partner at pension consultants LCP and former Pensions Minister, says: “We can now be pretty certain that the new state pension and the basic state pension will rise by 4.8%.
“This will keep the headline rate of the state pension below the income tax threshold for one more year, but it will go above the tax threshold in 2027 if allowances do not rise.”
For pensioners who receive ‘additional state pension’ (also known as SERPS or State Second Pension) on top of their basic pension, this additional element will be increased in line with the CPI figure for the year to September which has yet to be published.
The increase in the annual rate of the new state pension is around £10 higher than if the increase had been based on last month’s estimate of 4.7%.
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The Office for National Statistics (ONS) said regular wage growth fell back to 4.7% in the three months to August, down from 4.8% in the previous three months, and hitting a fresh low of more than three years.
The jobless rate increased unexpectedly to 4.8% in the three months to August, up from 4.7% in the previous three months.
This is the highest since March to January 2021, at the height of the pandemic, although the ONS said the figure needs to be treated with caution as it continues to overhaul its labour market survey.