Revised State Pension Increase Set to Boost Millions of Pensioners in 2024

Strategic Insights -

As the average earnings growth figure from the Office for National Statistics (ONS) has been revised upward to 4.8%, the state pension is set to rise by the same percentage next April, providing a much-needed boost to millions of pensioners. This increase is likely to exceed inflation and the 2.5% floor of the 'triple lock' formula, ensuring that pensioners' purchasing power remains intact. The revised figure will also keep the headline rate of the state pension below the income tax threshold for one more year, before potentially surpassing it in 2027 if allowances do not rise.

Key Takeaways:

  • The revised average earnings growth figure of 4.8% is expected to trigger a 4.8% increase in the state pension next April, benefiting millions of pensioners.
  • The increase will be around £10 higher than if the 4.7% estimate from last month had been used, providing a welcome boost to pensioners' purchasing power.
  • The state pension and basic state pension are set to rise by 4.8%, keeping the headline rate below the income tax threshold for one more year.
  • The additional state pension (also known as SERPS or State Second Pension) will be increased in line with the CPI figure for the year to September, which has yet to be published.
  • Pensioners who receive the additional state pension on top of their basic pension will see their total pension income increase by 4.8% next April.
  • The jobless rate increased unexpectedly to 4.8% in the three months to August, the highest since March to January 2021, although the ONS advises caution due to the ongoing overhaul of its labour market survey.

Statistics:

  • Average earnings growth: 4.8% (revised from 4.7%)
  • Projection for state pension increase: 4.8% (in line with average earnings growth)
  • Expected increase in state pension income: around £10 higher than if 4.7% estimate had been used
  • Jobless rate: 4.8% in the three months to August (highest since March to January 2021)
  • Number of pensioners set to benefit from the increased state pension: millions

Sources:

  • Office for National Statistics (ONS)
  • "ONS figures: Average weekly earnings in nominal terms" [1]
  • Steve Webb, partner at pension consultants LCP and former Pensions Minister [2]
  • "Thousands with mental health conditions and bad backs targeted in new DWP scheme" [3]