Retirees are in line for a bumper 3.9% state pension increase, after the September inflation figure was confirmed at 1.7%.

Under the state pension triple-lock, annual payments increase by the highest of average earnings in July, CPI inflation in September or 2.5%. As a result, the ‘old’ basic state pension will rise by £5.05 a week to £134.25, while the ‘new’ state pension will increase by £6.60 a week to £175.20.

AJ Bell senior analyst Tom Selby said: “Retirees will enjoy a near-4% increase in their state pension payouts next year, more than double the rise in average prices during September and thus a real boost to people’s incomes.

“Such a bumper increase clearly comes at a cost to the Exchequer, and with a general election seemingly inevitable the commitment of politicians to this policy is likely to be tested. On the one hand the triple-lock is quite an odd policy, increasing the real value of the state pension arbitrarily when earnings and inflation are low.

“It could be argued a more rational policy would establish what level a ‘fair’ state pension should be, raise the benefit to that amount and then remove the 2.5% element. However, it is likely the issue will become weaponised in the cauldron of an election battle as politicians desperately seek voter approval. Given older people usually head to the ballot box in the greatest numbers, it is extremely unlikely any party will propose significant changes to this popular policy in their respective manifestos.”

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