Pensioners may be wondering how much their payments will be going up next year as the triple lock delivers a 4.1% increase to the state pension from this April.
But a financial expert has said current uncertainties as to both inflation and the rise in earnings mean it’s hard to know how much next year’s increase will be.
The triple lock policy ensures the state pension goes up each year in line with the highest of either the rise in average earnings or the rate of inflation, or a 2.5% minimum raise.
Mike Stimpson, partner at wealth management firm Saltus, said it’s hard to tell which will be the key figure as the « economic outlook remains uncertain ».
The latest inflation figures show inflation at 3% for the year to January, up from 2.5% for the 12 months to December 2024, still above the Bank of England’s target of 2%.
Meanwhile, the latest data for the rise in average earnings is currently above this, at 6% for the period from October to December 2024.
The triple lock uses the inflation figure for the year to September and the average earnings figure for the period between May and July, to determine next year’s increase.
Asked for this thoughts on the triple lock for next year, Mr Stimpson said: « With the Bank of England cutting the base rate to 4.5%, a sharp drop in permanent staff vacancies, and downgraded growth forecasts, the economic outlook remains uncertain.
« While inflation has been a key concern, the latest data showing wage growth close to or outpacing inflation adds a new dimension to the triple lock calculation. »
Saltus recently released its latest Wealth Index Report looking at the views of high net worth individuals and their concerns for their financial future.
The report found those surveyed have a record low of confidence in the UK’s economic prospects, even lower than was recorded after Liz Truss’ infamous mini-Budget.
Mr Stimpson said it’s difficult to predict what will happen with wage growth, explaining: « The combination of the base rate cut, falling job vacancies, and weak growth forecasts presents a mixed picture for wage growth.
« However, the latest data suggests that wages may be keeping pace with or even exceeding inflation, which could influence the triple lock decision. »
He said that both factors will « need to be closely watched in the coming months ». With the 4.1% increase this April, the full new state pension will rise from the current £221.20 a week to £230.25 a week.
Those thinking of paying out to cover gaps in their National Insurance (NI) record may want to act now, as there is currently an extended period over which you can top up.
Usually you can only voluntarily buy contributions up to six years ago, but this is currently extended as far back as the 2006/2007 tax year. But you can only pay to fill in any gaps over this extended period until the end of this tax year.
You can check your NI record and pay voluntary NI contributions on the Government website.
