Pension increase of £400 is ‘small consolation’ for pensioners struggling this winter

Internal Treasury calculations reportedly seen by the BBC suggest that pensions could be increased in April as a result of the triple lock.

The changes would mean the full state pension would be around £12,000 in 2025/26, following the £900 increase in 2023.

Pre-2016 pensioners who are entitled to the secondary state pension could expect a £300 per year increase.

The report comes against the backdrop of strong reactions to the government’s decision to abolish heating cost subsidies for the majority of households in winter.

Helen Morrissey, head of pension analysis at Hargreaves Lansdown, said: “For many pensioners, this increase will have to be offset by the abolition of winter heating allowances.”

“Only those on pension supplement will now receive it and this will result in a gap of up to £300 this winter. This will be felt particularly badly by older pensioners on basic state pension. They receive the largest amount as winter heating allowance but will see a smaller increase in their state pension as they do not receive the new flat rate.”

She added: “The timing of the increase is also not helpful for pensioners who struggle to make ends meet in winter. The promise of a spring increase is little consolation for those who have to make difficult decisions about whether they can afford to heat their homes in the colder months.”

The new state pension system was introduced in 2016 to provide people with a sustainable and clear basis for building private savings.

Under the triple-lock system, the state pension increases each April in line with the highest rate of inflation (CPI) in September of the previous year or the average earnings growth in the period May to July of the previous year, or by 2.5%.

According to the latest figures from the Office for National Statistics (ONS), consumer price inflation was 2.2% in the 12 months to July 2024. Prices are rising more slowly than in 2022 and 2023, when households and businesses came under pressure at the height of the cost of living crisis.

With more moderate inflation, the wage increase could lead to the reported increase of £400.

Jon Greer, head of pensions policy at asset manager Quilter, said: “The news reported today that the triple lock is likely to be lifted by average earnings next year, with confirmation expected from next week’s average total wages, is a significant development for pensioners.”

He said the triple lock “remains a contentious issue in pensions policy and no government is prepared to make drastic changes due to the potential backlash from a core electorate.”

“Given recent changes to winter heating allowances, which sparked immediate calls for a rethink as many people will struggle to pay their bills this winter, any changes to the triple lock by Labour seem entirely unlikely, particularly given (Finance Minister) Rachel Reeves’ recent confirmation that she will stick to the policy.”

Any decision on a pension increase will be made by Foreign Secretary Liz Kendall before the October budget is presented.

An analysis published last week found that only around half of recipients of the new state pension received the full weekly amount last year – and around 150,000 received less than £100 a week.

Royal London said that last year 1,737,342 of the 3,407,567 recipients of the new pension received the full weekly amount.

The calculations were made based on data from the Ministry of Labour and Pensions from spring 2023.

The full state pension for 2024/25 will be £221.20 a week, compared to £203.85 last year.