EARNINGS GROWTH DETERMINES 2027 STATE PENSION INCREASE

September’s consumer prices index inflation rate was confirmed at 3.5% on Wednesday 21 October, below the 3.9% earnings measure used for the state pension triple lock. That makes earnings growth the measure for the increase due in April 2027. On that basis, the full new state pension is set to rise by about £9.40 a week. The projected weekly payment would move from £241.30 to £250.70, an increase of close to £500 over a year.

The triple lock raises state pensions each April by the highest of three measures. It compares consumer prices index inflation in the previous September with average annual growth in total earnings from May to July. A third measure guarantees an increase of at least 2.5%. The Office for National Statistics said total pay, including bonuses, grew by 3.9% in the three months to July. It said it would not adjust that earnings figure.

Before the September figure appeared, the earlier inflation rate cited in the pension calculation was 3.1%. The confirmed September rate is 0.4 percentage points below the earnings measure. The £9.40 weekly estimate applies to retirees who receive the full new state pension. Some retirees could pay income tax for the first time when pension payments rise.