The new state pension could rise to £12,631 from £11,973 in April 2026 under the triple lock pledge – an increase of 5.5 per cent – according to analysis by Deutsche Bank.
The issue became a key topic during last year’s general election campaign, with Labour refusing to match the Conservatives’ “triple lock plus” pledge.
Pensioners already pay tax if their overall income – including the state pension and other income – breaches £12,570, but the increase could mean around 450,000 people pay tax on their state pension alone.
Under the triple lock, the state pension is increased by either the average increase in wages from May to July of the previous year, CPI inflation, or 2.5 per cent – whichever is highest – every April.
Speaking to The i Paper, Sanjay Raja, Deutsche Bank’s chief UK economist, said: “As of right now, our projection for average weekly earnings total pay in the three months to July sits at 5.5 per cent year-on-year.
Wage growth, excluding bonuses, accelerated to 5.9 per cent in the October to December period last year, according to figures released today (18 February), a 5.6 per cent rise in the three months to November.
Experts at Capital Economics also expect the new state pension will rise by 5.1 per cent in April next year, which would take the amount to £12,583 a year.
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Read MoreFormer pensions minister Sir Steve Webb confirmed a significant increase in the state pension next April could “easily” take the standard rate of the new state pension over the income tax threshold.
“In practice, HM Revenue & Customs (HMRC) would be likely to decide that such small amounts were not cost effective to collect.
During last year’s election campaign, the Tories accused Labour of planning a “retirement tax” because the party did not match the triple lock plus pledge. The Labour government has not committed to raising the income tax threshold – either for pensioners or other taxpayers.
Chancellor Rachel Reeves has said she does not intend to introduce any further tax rises but has not ruled out confirming a continuing freeze of tax thresholds, including the personal allowance – pulling more people into higher tax brackets as their salaries rise.
Retirees who receive the full new state pension will see their payments rise to £230.25 a week, or £11,973 a year, from this April.
The full basic state pension, paid to those who reached state pension age before April 2016, will rise to £176.45 a week, or £9,175 a year.
Until then, retirees will continue to receive their state pension at the current rate of £221.20 a week, or £11,502.40 a year, for those on the new state pension, and £169.50 a week, or £8,814 a year, for those on the basic state pension.
The wage growth figures also “undermines” the Bank of England’s efforts to contain inflationary pressures and stabilise inflation towards the Bank’s 2 per cent inflation target, he said.
Ros Altmann, who was pensions minister directly after Sir Steve, said it’s important to remember that no one can be sure what will happen to earnings growth in the next few months.
The Department for Work and Pensions (DWP) has been contacted for comment.
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