Pensioners in line for record boost as Chancellor vows to keep triple lock

Link to inflation ensures weekly payout will increase to £204 from April for many retirees

MILLIONS of retirees will receive the biggest pay rise on record next spring as the state pension is on track to soar past £10,000.

Jeremy Hunt confirmed that he would keep the Tories’ “triple lock” manifesto promise and that the weekly state pension would rise to £204 from next April, equivalent to £10,600 a year and £972 higher than current levels. The older basic state pension will increase to £156 a week, or £8,122 each year.

The triple lock promises to increase the state pension every April in line with the highest of the previous September’s inflation, wage growth or 2.5 per cent.

Mr Hunt said: “The cost of living crisis is harming all pensioners... we will fulfil our pledge to the country to protect the pensions triple lock.

“To the millions of pensioners who will benefit from this measure, I say now and always, this government is on your side.”

The Government also announced that Pension Credit will increase by 10.1 per cent to protect the poorest retirees.

Confirmation of the triple lock will come as a relief to millions, after Rishi Sunak abandoned the policy last year as chancellor after the furlough scheme created a freak increase in wage growth.

Steven Cameron, of the pension firm Aegon, said: “Honouring this manifesto commitment, after ditching it last time round, will provide much-needed support for pensioners, many of whom are on low and fixed incomes.” Half of retirees rely on the state pension as their main source of income, according to Royal London, a financial advice firm.

However, experts warned more uncertainty lay ahead for future retirees. Mr Hunt said the Government would publish its review into the state pension age early next year, as expectations rise that it could increase to 70 sooner than expected.

Plans are already in place to increase the state pension age to 68 between 2044 and 2046 for those born on or after April 1977.

Stephen Lowe, of the pensions specialist Just Group, said: “The review of the state pension age increases the uncertainty for people planning for retirement. The goalposts look set to change once again, meaning many look likely to work or rely on their own pension savings for longer.”

Advisers have also warned of a “sting in the tail” for retirees as they could face paying income tax on their state pension after the Government extended the freeze on the tax-free personal allowance of £12,570.

If the triple lock is upheld, pensioners would end up paying income tax by the 2027-28 tax year, according to calculations from the pensions specialist Barnett Waddingham.

The triple lock has also attracted much criticism for being intergenerationally unfair, as the decision to opt for an inflation link rather than an earnings link in the state pension will cost the Treasury an additional £5billion.

Liz Emerson, of the Intergenerational Foundation, said: “It seems this government is putting the interest of older, wealthier generations before those of our children and grandchildren.

“The state pension is rising by 10.1 per cent, and yet the national living wage is rising below inflation at 9.7 per cent.”

‘Honouring this manifesto commitment, after ditching it last time round, will provide muchneeded support’