State pension likely to rise by £488 a year in April

The state pension is expected to top £13,000 next April, reigniting the debate about its long-term affordability and generational fairness.

It is expected to rise by £488 to £13,036.40 a year, based on the latest official earnings figure released on Tuesday.

The so-called triple lock pension policy guarantees that annual payments will increase by either average wage growth, inflation or 2.5% – whichever is highest.

Labour made a manifesto pledge to keep the triple lock, however economists have warned about the cost of the policy and it will mean tough spending choices in next month’s Budget.

The policy is “crazy,” Ruth Curtice, the chief executive of the Resolution Foundation think tank, told the BBC.

The triple lock is creating a “ratchet effect” where “pensioners’ living standards grow even faster than just a typical worker,” she added.

The policy was introduced under the Conservative-Liberal Democrat coalition government.

Curtice told the BBC’s Today programme: “It’s not affordable in any situation to simply have pensions rising faster than earnings because earnings are a big part of the tax base.

“Pensioners have seen living standards grow three times more than typical workers over the last 20 years.”

Average wage growth, including bonuses, eased to 3.9% between May and July, according to the Office for National Statistics. However, it remains above inflation at 2.9%.