How much will pensions rise?
The Chancellor will reveal all in his Autumn Statement, says Paul Lewis
We won’t know until the Chancellor’s Autumn Statement on 22 November how much the state pension and other benefits will rise from April 2024. But we do know what should happen – unless the Government changes the law, as it did in 2021. That was to prevent the state pension rising with the 8.4% increase in earnings, which it said was a post-Covid anomaly. Instead it increased it by inflation, which was then 3.1%.
The law states that once a year the Work and Pensions Secretary must review the general level of earnings and raise the basic and new state pensions to keep up with that rise. The earnings figure used is the increase in total earnings between May and July one year and May and July the next. This year that rise was 8.5%, meaning the state pension should rise by 8.5% from next April.
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Not all the state pension is covered by this law, though. Additional amounts – such as Serps, graduated pension and the extra paid to those who defer their claim – do not rise with earnings but are lumped together with other benefits, which the law says must rise in line with prices. That is measured by the Consumer Prices Index (CPI) for September, which rose by 6.7%.
So pensioners can expect a two-tier increase, with most of their pension rising by 8.5% and the rest by 6.7%. There has been speculation that the Chancellor, Jeremy Hunt, might pick a lower measure of wage rises that excludes bonuses (7.8%), or use the 6.7% rise in prices for all parts of the state pension. The “triple lock” would mean he uses the rise in wages (8.5%), but it’s a political commitment, not a legal one.
The table below shows what to expect under all three scenarios.
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