…the Department for Work and Pensions has confirmed.
From the 10th April 2017 the value of the flat-rate state pension, brought in earlier this year, will increase to £159.35 from the current rate of £155.60.
Under the Government’s controversial ‘triple lock’ manifesto commitment, the basic and new state pensions will rise in line with the highest of inflation, earnings or 2.5 per cent.
Pensioners who reached retirement age before 6 April 2016 claim the basic state pension, which will increase to £122.30 from £119.30 next April.
Research by the Pensions Policy Institute, an independent research group, reveals that the cost of the state pension will increase from 5.3 per cent of GDP now to 7.2 per cent by 2046.
The triple lock’ guarantee has been criticised by campaigners, arguing that it is unfair on younger generations of workers paying for the state pension through their taxes.
Former ministers, including Ros Altmann and Iain Duncan Smith have called for it to be scrapped, although Ms Altmann believes the government should do so at the end of this parliament in 2020.
This week former secretary of state for work and pensions Stephen Crabbe called on the government to review the guarantee, arguing in an interview with Sky News that it had “served its purpose”.
Tom McPhail, head of retirement policy at Hargreaves Lansdown, believes the triple lock should be urgently reviewed.
“Pensioners can’t continue to enjoy indefinitely a ‘heads I win, tails you lose’ guarantee at the expense of taxpayers,” he said. “A review now looking beyond 2020 makes sense.”
“Pensioner incomes have improved very substantially in recent years, in part thanks to the triple lock itself and partly because of the final salary pension system hitting peak payouts.
“The incomes of many in work have flat-lined at best in recent years. There is therefore a growing recognition of the disparity between the fortunes of the Baby-boomers now in retirement, and those younger cohorts who are being asked to pay for the cost of the state pension through their taxes.”