Chancellor Jeremy Hunt is set to deliver the Autumn Statement on Wednesday, November 22, and is under pressure to commit to honouring the triple lock which will see the state pension increase by 8.5 per cent next April.
The triple lock ensures that older Britons are in receipt of a fair increase to their state pension income, with it guaranteed to rise by the highest of inflation, average earnings growth or 2.5 percent.
The wage growth, including bonuses, was the highest figure this year at 8.5 percent and should therefore be used for the state pension increase.
Yet there is speculation that Mr Hunt could reduce this to 7.8 percent, arguing that NHS and civil service bonuses have skewed the overall figure.
Speaking ahead of the Autumn Statement, Jason Hollands, managing director of Bestinvest, said: “There are doubts about the long-term sustainability of the triple lock, but backing away from it in the run-up to a general election would be a very high risk for all the parties.”
He continued: “What we may see is a decision to adjust the formula, at least temporarily. The case for doing this is strengthened by the distorting impact on bonus figures arising from one-off public sector pay settlements in the NHS and civil service this summer which back-dated pay increases.
“There is some precedent here as the earnings growth element of the triple lock was previously suspended in 2021 due to the distortions caused by furloughed employees returning to work.”
The full new state pension is worth £203.85 per week but a 7.8 percent increase would increase this figure to £219.75 each week and an 8.5 percent rise would see weekly payments rise to £221.20.
Those on the basic state pension would see their payments rise from £156.20 a week, to £168.40 if a 7.8 percent increase is confirmed and £169.50 for an 8.5 percent rise.
Mr Hunt is also expected to use the fiscal update to slash inheritance tax and business taxes in an effort to secure Conservative voters ahead of a general election.