The flat-rate state pension could increase by £746.20 to £10,085.40 next year (£193.95 per week) if average earnings increase by 8%.
Today the ONS confirmed average weekly earnings increased by 6.6% (7.3% including bonuses) in the three months to the end of May, up significantly from the 5.6% announced for the three months to end of April.
The state pension triple-lock normally uses the average earnings figure from the three months to the end of July and there is every chance average earnings continue to spike as society emerges from lockdown.
Even a more conservative estimate of a 5% earnings jump would raise the value of the flat-rate state pension by £468 to £9,807.20 in 2022/23 (£188.60 per week).
The Office for Budget Responsibility (OBR) estimates every 1 percentage point rise in the state pension will cost the Treasury around £900 million. Policy options include scrapping the earnings element or smoothing it over a longer time period
Tom Selby, senior analyst at AJ Bell, comments:
“Chancellor Rishi Sunak faces being caught between the Devil and the deep blue sea on the state pension triple-lock.
“While the policy could add billions of pounds to public spending at a time of severe fiscal pressure for the country, unpicking it would break a manifesto commitment.
“If average earnings spike by 8% in the three months to July, which looks entirely plausible based on the current data, this could increase the value of the flat-rate state pension by £746.20 to over £10,000 a year, or £193.95 per week.”