State Pension rise 2024/2025 story

pinnks

It doesn't take a genius to work out the likely increase.  The law requires the pension to increase by at least in the increase in average earnings released in September.  Last month that was 4.5%, so it seems likely to be around that amount when the numbers are released next week.  Inflation is currently 2.2% but the CPI data for the triple lock will be published in October.  It seems unlikely that that will be much different to the current figure.  And 2.5% is irrelevant this year.

So, it is almost guaranteed that the number to be used will be the increase in average earnings and that that will be around 4.5%, increasing the pension to about £12,020... 

double_dutchy

hyubh said:

last year inflation was the higher of the three, this year it's wage growth.

In fact last year's "triple lock" pension increase (the one that came in in April 2024) was also based on earnings growth which was 8.5% for the relevant period as opposed to CPI which was 6.7%

Dazed_and_C0nfused

double_dutchy said:

hyubh said:

last year inflation was the higher of the three, this year it's wage growth.

In fact last year's "triple lock" pension increase (the one that came in in April 2024) was also based on earnings growth which was 8.5% for the relevant period as opposed to CPI which was 6.7%

And maybe this year it could be earnings growth excluding bonuses, which at the latest count was nearly 1% higher than earnings with bonuses.

Probably different by the next update though.

double_dutchy

Dazed_and_C0nfused said:

And maybe this year it could be earnings growth excluding bonuses, which at the latest count was nearly 1% higher than earnings with bonuses.

Indeed, 5.4% to 4.5% last month. My understanding is that the triple lock is based on the "including bonuses" figure. Is that not right?

I know last year there were reports that Sunak was considering using the excluding bonuses figure, which at the time was lower of the two.

hyubh

double_dutchy said:

hyubh said:

last year inflation was the higher of the three, this year it's wage growth.

In fact last year's "triple lock" pension increase (the one that came in in April 2024) was also based on earnings growth which was 8.5% for the relevant period as opposed to CPI which was 6.7%

Hmm, I guess I was conflating the increase applied last year vs. the increase for last year... That said, been quite even over time, hasn't it? Inflation 5 times, earnings 4 times, fixed 2.5% 4...

Eldi_Dos

Dazed_and_C0nfused said:

double_dutchy said:

hyubh said:

last year inflation was the higher of the three, this year it's wage growth.

In fact last year's "triple lock" pension increase (the one that came in in April 2024) was also based on earnings growth which was 8.5% for the relevant period as opposed to CPI which was 6.7%

And maybe this year it could be earnings growth excluding bonuses, which at the latest count was nearly 1% higher than earnings with bonuses.

Probably different by the next update though.

I think to get the nearly £400 above inflation increase for NSP it would be around CPI 2.1% and earnings growth around 5.5%

double_dutchy

hyubh said:

That said, been quite even over time, hasn't it? Inflation 5 times, earnings 4 times, fixed 2.5% 4...

This link's a year old but it shows the history (not including the 2024 rise)

The triple lock: uncertainty for pension incomes and the public finances | Institute for Fiscal Studies (ifs.org.uk)

hugheskevi

double_dutchy said:

hyubh said:

That said, been quite even over time, hasn't it? Inflation 5 times, earnings 4 times, fixed 2.5% 4...

This link's a year old but it shows the history (not including the 2024 rise)

The triple lock: uncertainty for pension incomes and the public finances | Institute for Fiscal Studies (ifs.org.uk)

Something I am surprised never gets any mention is that if no changes had been made - no Triple Lock, no 2.5% underpin, no RPI/CPI change - just straight RPI uprating throughout the whole period since 2010, the State Pension today would be higher than it is (Basic State Pension would be about £2 more per week).

It is quite something to get so much credit for making changes that led to pensioners being worse off! Starmer and Reeves could do with taking note.

xylophone

So, it is almost guaranteed that the number to be used will be the increase in average earnings and that that will be around 4.5%, increasing the pension to about £12,020... 

Increasing a full new state pension to  around £12,020 per annum.  The whole of the full NSP increases by the greatest of wages 

growth, inflation or 2.5% with anything above  (Protected Payment increasing by  CPI inflation.

The full basic old state pension would increase to around  £9210 a year with any Additional State Pension increasing by CPI 

inflation.

pinnks

hugheskevi said:

double_dutchy said:

hyubh said:

That said, been quite even over time, hasn't it? Inflation 5 times, earnings 4 times, fixed 2.5% 4...

This link's a year old but it shows the history (not including the 2024 rise)

The triple lock: uncertainty for pension incomes and the public finances | Institute for Fiscal Studies (ifs.org.uk)

Something I am surprised never gets any mention is that if no changes had been made - no Triple Lock, no 2.5% underpin, no RPI/CPI change - just straight RPI uprating throughout the whole period since 2010, the State Pension today would be higher than it is (Basic State Pension would be about £2 more per week).

It is quite something to get so much credit for making changes that led to pensioners being worse off! Starmer and Reeves could do with taking note.

That may be correct but the state pension increase has been statutorily linked to the increase in average earnings including bonuses since before 2010.  It was the last labour government than swapped back from CPI to Earnings if memory serves.