The State Pension is likely to rise by just over £500 next April, with the increase set to be based on next month’s average earnings figure.
Experts predict the rise will be higher than the two other components of the Triple Lock figures of 2.5% or the current inflation rate.
The Triple Lock mechanism means the higher figure of the average earnings rise will be used.
Official figures published today showed that the average earnings rise (including bonuses) for April to June stood at 4.1%.
With inflation at 2.6%, it seems likely that next month’s average wage figure, which is expected to be around a similar level, will be used.
The Triple Lock aims to increase the State Pension by whichever is highest of average wages (May-July), September’s CPI inflation or 2.5%.
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown, said: “With inflation standing at 2.6%, this suggests, barring a shock inflation spike over the next couple of months or collapse in average wage growth, that wages will be the element used.”
The September inflation figure is due to be published in October and it the Bank of England has forecast a rise to around 3.2% by Q4.
That would still leave it lower than the average wage figure. Former pensions minister Steve Webb, partner at consultants LCP, said: “If there is no change to earnings growth next month, we can expect a rise of just over £500 in the new State Pension, taking it just under £500 above the tax threshold.”
The new State Pension currently stands at £241.30 a week. An increase of 4.1% would add £9.90 per week to it taking the new state pension to £251.20 per week.
Someone on a full basic state pension would see their weekly amount rise from £184.90 per week to around £192.50 from next April.
Mr Webb said: “The sting in the tail is that this increase will take the standard rate of the new state pension above the tax threshold.
“We therefore urgently need to know how the government plans to fulfil its pledge to make sure that those wholly dependent on the new state pension will not be charged income tax next year.”