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State pension expected to rise by 2.5% next year

15th Oct 2013

The state pension is anticipated to rise by 2.5% in 2014, thanks to the triple lock guarantee.

This commitment, made in 2010 by the coalition government, assures that state pension payments will rise by the higher of price rises and wage inflation, subject to a minimum rise of 2.5%.

The inflation rate for September will be announced this morning.  This is the month which is normally used as the basis for calculating the following year’s rise in the basic state pension.

Analysts expect September’s inflation figures for the rise in the Consumer Prices Index (CPI) to be 2.4%.

Meanwhile, wage inflation remains subdued at between 0.9% and 1.2% on average.  This means that next year’s rise in the state pension will probably be the minimum of 2.5% according to the triple lock guarantee.

“We expect CPI inflation to fall from 2.7% to 2.4% in September,” said Capital Economics, an economic research consultancy.  It added that the rate could drop as low as 2%, the government’s target, “within six months or so”.

This inflation rate would take some of the pressure off struggling households and, the hope is, make it easier for the economy to recover from recession.