State pension to breach £200 a week mark for first time

The state pension will breach the £200 a week mark for the first time next April, with pensioners on track for a record boost as a result of runaway inflation.

Pensioners will be largely sheltered from the cost of living crisis next year as the state pension guarantees them an inflation-matched increase in income, while younger working households will bear the full brunt of rising prices, experts have warned.

Consumer prices rose 10.1pc in the year to July, as inflation surged into double digits for the first time in 40 years, new figures from the Office for National Statistics have shown.

More than 12 million pensioners stand to gain almost £1,000 next year as the state pensions “triple lock” ensures the payment rises by the highest of inflation, wage growth or 2.5pc.

If inflation remains at these levels in September, the month used in the calculation, the new state pension will rise by £18.70 a week, from £185.15 to £203.85. The basic state pension, which is paid to those who reached state pension age before 2016, would increase from £141.85 to £156.20.

Andrew Tully, of pensions company Canada Life, warned that this would spark an intergenerational divide. He said: “While workers continue to feel the pain as wages lag inflation, there will be some positive news in the coming months for retirees. It is highly likely the state pension is on track to increase by a record amount in April 2023.”

Retirees are on track for two back-to-back double digit increases over the next two years, as inflation is expected to remain high in 2023, according to forecasts from the Bank of England. This would deliver a record £2,052 boost by April 2024 under the Government’s triple lock promise.

But pensioners have seen their incomes fall by £673.95 in real terms this year, as inflation has risen more than three times faster than the state pension.

The triple lock was suspended this April and pensions only rose by 3.1pc last month after the Government ignored abnormal 8.1pc wage growth figures that were impacted by furlough. The controversial decision left over-66s £15,700 poorer over an average retirement.

Conservative leadership candidate Liz Truss promised earlier this month she would uphold the triple lock, in a spending commitment that could cost taxpayers £24bn in the next two years alone, according to calculations by AJ Bell.