The latest wage growth figures mean a 4.1 per cent increase is the most likely metric to decide next April's triple lock hike, potentially delivering £770 monthly payments to basic state pensioners born before 1953.
Triple lock mechanism and wage growth
The Department for Work and Pensions (DWP) hikes the state pension each April based on whichever is highest: wages, inflation or 2.5 per cent. With inflation at 2.6 per cent, wage growth's 4.1 per cent figure will likely be the decider. Andy Burnham has pledged to keep the triple lock now he is Labour Party leader.
A 4.1 per cent increase would take the basic state pension's £184.90 weekly rates to £192 a week, or £770 a month. The basic state pension is for women who were born before 1953, or men before 1951.
Expert analysis on political and fiscal implications
Tom Selby, director of public policy at AJ Bell, said: “A significant section of the public support the triple lock, particularly older voters, and any party indicating it will not pledge allegiance to the policy risks being annihilated at the general election.”
Selby added: “There are two main levers available to control costs: the amount people receive from the state in retirement, and the age at which they receive it. If you can’t pull the ‘amount’ lever, then the only option left is age, a shift that would only impact younger generations.”
Call for broader debate on pension affordability
Aegon pensions director Steven Cameron said growing scrutiny of state pension funding should prompt a wider debate about the future of the triple lock, and he urged Burnham to address this issue if he becomes the next Prime Minister.
Cameron says that the state pension remains a key part of retirement funding for millions of people, but added that policymakers need to look beyond a simple choice between retaining or abolishing the triple lock, and instead consider reforms that preserve its core aims while improving long-term affordability.
