The State Pension usually increases in line with the government’s ‘triple lock guarantee’ each April to ensure it won’t lose value in real terms.
This means that it is guaranteed to rise by the highest of the preceding September’s inflation figure, earnings growth, or 2.5%. Soaring wages are currently outstripping inflation, with annual wage growth at 8.5% and inflation in September at only 6.7% (and having fallen to 3.2% since).
The government had considered stripping out the effect of bonuses to give a lower increase of 7.8%, but the decision was made, for now, to keep the triple lock in place. The new State Pension increased from £203.85 to £221.20 a week in April 2024, whilst the full basic State Pension increased from £156.20 a week to £169.50 a week.
Here, we explain what you need to know about how the triple lock works, what it means for your pension income, and why it’s important to be prepared for any changes that could lie ahead.
If you’re considering getting professional financial advice, Unbiased is offering Rest Less members a free pension review. It’s a chance to have a qualified independent financial advisor (IFA) take a look at your pension arrangements and give an unbiased assessment of your retirement savings.
The review is free and without obligation, but if the IFA feels you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.
Contents
- How does the triple lock usually work?
- How does the triple lock benefit me?
- How has the State Pension risen over the years?
- How much did the State Pension rise by in April?
- Will the triple lock remain in place?
- What would happen to the State Pension if the triple lock is scrapped?
- How can I increase my State Pension?
- What else can I do to boost my retirement income?
- Getting advice on your pension
How does the triple lock usually work?
The triple lock works in one of three ways, guaranteeing that the basic and new State Pension will rise by the greatest of the following three figures:
- 2.5%
- September’s inflation rate, or the rate at which the cost of goods and services increases by, as measured by the Consumer Prices Index (CPI)
- Average earnings growth, as measured by the Office for National Statistics (ONS).
Given that average earnings rose by 8.5% in September 2023, the State Pension increased by this amount in the 2024/25 tax year. However, in years when both average earnings and inflation (CPI) are very low, and don’t rise by more than 2.5%, then the State Pension will still increase by 2.5%. This way, the State Pension rise could beat inflation, which has happened often since the introduction of the triple lock.
Find out more about the State Pension in our article How the State Pension works.
How does the triple lock benefit me?
The triple lock was designed to ensure that the amount of State Pension you receive will at least keep pace with the rate of inflation, or the rising cost of living.
As a three-way guarantee, the triple lock is considered a particularly effective safeguard when it comes to State Pension payments. It gives peace of mind that the spending power of your State Pension will not fall during your retirement and, in fact, your pension may actually beat inflation given the three guarantees.
After all, retirement can last for several decades, or even longer, and over this time period the cost of living can rise dramatically. There have been times, such as in the 1970s, when inflation skyrocketed and placed extreme pressure on household finances, and particularly pension incomes.
How has the State Pension risen over the years?
The latest increase of 8.5% for 2024/25 is the second largest annual rise in the State Pension since the triple lock was introduced in 2011. The biggest rise was 10.1% in 2023/24, which was due to inflation reaching this level.
However, annual increases are not usually as great as this, as you can see from the table below, which details all the rises over the years, and which figure they were based on that particular year.
State Pension rises since 2012
| Tax year | State Pension rise | Rise based on |
| 2012/13 | 5.2% | CPI |
| 2013/14 | 2.5% | 2.5% |
| 2014/15 | 2.7% | CPI |
| 2015/16 | 2.5% | 2.5% |
| 2016/17 | 2.9% | Earnings |
| 2017/18 | 2.5% | 2.5% |
| 2018/19 | 3% | CPI |
| 2019/20 | 2.6% | Earnings |
| 2020/21 | 3.9% | Earnings |
| 2021/22 | 2.5% | 2.5% |
| 2022/23 | 3.1% | CPI |
| 2023/24 | 10.1% | CPI |
| 2024/25 | 8.5% | Earnings |
Source: House of Commons research library
How much did the State Pension rise by in April?
The State Pension rose by 10.1% in April this year in line with September 2022’s inflation figure, after the triple lock was reinstated. This saw the State Pension increase by £18.70 a week, which will help many cover soaring living costs.
The new State Pension, which applies to those who reached retirement age on or after 6 April 2016, is £203.85 a week in the current 2023/24 tax year. If you retired before 6 April 2016, the most you can get from the basic State Pension in the 2023/24 tax year is £156.20, up from £141.85 a week in the 2022/23 tax year.
Will the triple lock remain in place?
It appears the triple lock is safe, for the time being at least.
Sian Steele, head of tax at professional services and wealth management firm Evelyn Partners, said: “With an election on the horizon, the political consequences of tinkering with the triple lock might have figured in the Chancellor’s calculations. Whether the state pension can be increased in the same way over the long term alongside an ageing population is another question.”
There have been calls to scrap the triple lock entirely over concerns that it’s too expensive to maintain, but only time will tell if this will happen.
What would happen to the State Pension if the triple lock is scrapped?
If the concept of any kind of lock was entirely scrapped, and the government chose to decide on any increases to the State Pension in the Budget, this could see pensioners hard hit. Yet try not to worry about this, as while major changes cannot be ruled out, it’s unlikely there would be such a dramatic sudden shift in policy.
Generally, it’s the generations that have yet to reach retirement and are one or two decades away that are most likely to be impacted by any major changes to the triple lock. At present, the State Pension age is 66, but it will rise to 67 by 2028, and is expected to increase to 68 between 2037 and 2039. It is impossible to predict with any certainty what further changes lie ahead to the State Pension for those yet to reach retirement, which is why it’s important to try to make your own provision for retirement as well, usually either by paying into a workplace or private pension.
How can I increase my State Pension?
There are ways you can boost the amount you receive from the State Pension, if you’ve yet to receive it. For example, you can defer taking your State Pension to increase the amount you get. Deferring for 12 months, for example, will increase the amount you receive by 5.8% a year. However, this should be a carefully thought out decision, as it’s not necessarily clear cut and relies upon a variety of factors to be ultimately beneficial.
Find out more about how this works and the potential benefits and pitfalls in our article Deferring State Pension – How much can I get and is it worth it?
Remember that the amount of State Pension you receive is based on your National Insurance Contribution (NIC) record over your lifetime. You need to have 35 ‘qualifying years’ of NICs to receive a full state pension, and 10 years to receive anything at all. These can be made up of NICs paid while you were employed, Class 2 NICs if you’re self-employed, national insurance credits if you are caring for a child aged under 12, or in receipt of Carer’s allowance. You can also pay voluntary NICs to make up for missing years in your record and increase the amount of State Pension you receive.
Find out more about how to check your record, and build up your State Pension entitlement in our articles How the State Pension works and Is it worth paying to top up my State Pension?
What else can I do to boost my retirement income?
Ideally, none of us should rely on the State Pension alone to fund our retirement, as it’s unlikely to provide enough for a comfortable standard of living. If you can afford to, it’s a good idea to build up private savings through a workplace pension scheme, or your own personal pension, to supplement your State Pension income. Find out more in our article Saving into a pension for the first time.
It’s also worth considering if you might have lost track of pensions over the years, particularly if you’ve moved jobs a number of times. Find out more about how to track these down in our article Tracing lost pensions.
Ultimately, when you reach retirement, you have plenty of options on how to produce an income from your workplace and personal pension savings. Find out more in our article Your pension options at retirement.
Getting advice on your pension
The Government’s Pension Wise service, run by the Pensions Advisory Service and Citizens Advice, provides people aged 50 and above with free guidance on their pension choices at retirement. You can give them a call on 0800 138 3944 to book a free appointment, or you can book one via their website.
It’s always worth taking advantage of a free appointment with Pension Wise, however if you want advice that’s tailored to you specifically, you’ll also need to speak to a financial advisor, as Pension Wise can only provide general guidance and not individual recommendations. In this case, our guide on How to find the right financial advisor for you might be helpful.
If you’re considering getting professional financial advice, Unbiased is offering Rest Less members a free pension review. It’s a chance to have a qualified independent financial advisor (IFA) take a look at your pension arrangements and give an unbiased assessment of your retirement savings.
The review is free and without obligation, but if the IFA feels you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.
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