The UK state pension could rise by about £460 a year from April 2025, the latest wage growth figures suggest.
Average earnings including bonuses in the three months to July, which is used to calculate the pensions triple lock, grew by 4%, according to the Office for National Statistics, down from 4.6% year on year over the three months to June.
A commitment by the government to maintain the triple lock on the state pension, which guarantees annual increases in line with whichever is the higher of inflation, 2.5% or annual earnings, has boosted pension payments since it was introduced in 2012.
The annual inflation rate in September – published by the ONS next month – is the inflation figure used to calculate the triple lock, but wage growth in the three months to July is expected to be higher. UK inflation currently stands at 2.2%.
Labour said it would retain the triple lock for the rest of the parliament after it scrapped the winter fuel allowance, except those pensioners on the lowest incomes who claim pension credit.
If confirmed, the changes would take the full state pension for men born after 1951 and women born after 1953 to nearly £12,000 in 2025, after a £900 a year increase from April 2024.
The earnings figures also indicated that the jobs market has slowed as employers shed staff and the number of vacancies fell.
There were 857,000 job vacancies in June to August 2024, down 42,000 from the previous quarter and 143,000 lower than the same month last year, though still 61,000 above pre-Covid-19 levels.
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A revised estimate of how many workers were on company payrolls in July fell by 6,000 from June. The ONS said a provisional estimate for August 2024 showed payroll numbers dropped even more, down another 59,000. The unemployment rate dipped to 4.1% from 4.2%.
Wages excluding bonuses grew by 5.1% in July, well above the rate of inflation but down from 5.4% in the previous three months. Bank of England policymakers are likely to be concerned that average wage growth excluding bonuses remains above 5% when they meet later this month to decide the level of interest rates.