The state pension is set to rise by £460 a year from next April, after the latest labour market data revealed that average wages including bonuses rose by 4% over the past year.

Under the triple lock, the state pension increases by whichever is the highest of consumer-prices index (CPI) inflation, average wages and 2.5%.

Industry experts have said that inflation is unlikely to outstrip this wage figure, meaning that the full basic state pension is set to rise from £8,814 to £9,167 per year, while the new state pension is set to rise from £11,502 per year to around £11,962 from next April.

Quilter head of retirement policy, Jon Greer, said that the news that the triple lock is likely set to increase the state pension by 4% provides a “significant boost” to pensioners.

However, Royal London warned that savers may not be getting as much as they are entitled to, with recent data obtained by Royal London revealing that only half of the 3.5 million recipients of the new State Pension were paid the full weekly amount of £203.85 last year, due to gaps in their National Insurance record.

And even for those who are in receipt of the full state pension, Hargreaves Lansdown head of retirement analysis, Helen Morrissey, warned that, despite the boost, “there’s every chance it’s not enough to placate those pensioners still reeling from the loss of the winter fuel payments, especially given how close this is edging to busting the personal allowance”.

“The loss of the winter fuel payment will be especially keenly felt by older pensioners on the basic state pension who receive larger payments, but have seen a smaller increase in their state pension as they are not on the new flat rate pension,” she continued.

“Life is also tougher for those who get pension credit and the winter fuel payment, who won’t be getting a cost of living payment this November.”

Broadstone head of market engagement, Simon Kew, agreed, stating: “While this will cushion the blow to many following the means-testing of winter fuel payments, the coming increase to energy bills and sustained rises in the cost of living since the pandemic will still be squeezing pensioners’ budgets."

At the same time, Morrissey pointed out that the increase will take the full state pension to just shy of £12,000 next year, closing in on the £12,570 personal allowance.

“Given that the freeze to this threshold is expected to remain in place until 2028, it raises the spectre of the full state pension alone taking pensioners over it and into the realms of paying income tax during the next few years,” she said.

“If pensions are rising with price inflation at the point when the state pension eventually breaches the personal allowance, once tax is taken into account, retirees who get just the state pension will actually be worse off in real terms.

“Pensioners are already asking whether they should be in the frame for filling the gap in the public finances, and this isn’t going to quell their concerns.”

---