Retirees could see their pensions rise by 8% next year according to the Office for Budget Responsibility (OBR).
State pensions are guaranteed to rise each year until at least 2024 under the triple lock, which means they increase in line with rising inflation, growing average wages, or 2.5%, whichever is highest of the three.
In the three months to April 2021, earnings growth hit 5.6%, and if the Bank of England's forecast that earning growth could rise to 8% over the next two months is accurate, the Government will have to fork out an extra £3 billion, the OBR said.
At present, the new flat-rate state pension for those who reached state pension age after April 2016 is £179.60 a week.
Those who reached the state pension age before April 2016 currently receive £137.60.
The OBR added:
"The ratchet effect of the triple lock means the higher starting point would raise state pensions costs relative to GDP in all future years too."
Get in touch to talk about your pension plan.
