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Next year’s state pension increase could be lower than state pensioners might be expecting, looking at the latest economic figures.
Monthly real GDP fell 0.3% in April 2025, dropping off after growing 0.2% the month before. The economic slowdown could trigger a drop in wage growth, one of the measures used in the triple lock.
The triple lock guarantees the state pension rises each April in line with the highest of the rise in average earnings, inflation or 2.5%, with average earnings currently the top figure, at 5.3% in the latest figures out this week, while inflation came in at 3.5% for the year to March.
Amy Knight, personal finance and small business expert at NerdWallet UK, warned: “A slowdown in economic growth could spell trouble for pensioners relying on a sizeable uptick in their state pension to stay on top of rising bills.”
She said other trends indicate the state pension rise may be more modest than expected next April, saying: “If stunted growth continues this summer, a weaker labour market could follow.
“Employment data out this week shows a fall in the number of employees on company payroll. At the same time, growth in pay was lower than the previous three-month period.
“If growth in pay keeps cooling, this would drag down the average earnings figure, potentially resulting in a smaller state pension increase in April 2026.”
Ms Knight also warned that if the UK goes into recession, both inflation and average earnings figures could drop low enough that the minimum 2.5% kicks in, although she said this is “unlikely”.
If earnings growth fell to 4% and this proved to be the key figure for the triple lock, the full new state pension would rise from the current £230.25 a week to £239.50 a week, an increase of £480 a year.
Kate Smith, head of Pensions at wealth firm Aegon, said the latest economic figures could also have a knock-on effect for the state pension rise.
She said: “Despite expectations for inflation to temporarily climb before settling back closer to the Bank of England’s 2% target, the outlook for earnings growth could fall given the current economic outlook.
“In April this year, state pensions saw a 4.1% rise in line with earnings growth. Time will tell, but is does look increasingly unlikely given the lack of UK economic growth this year, that pensioners will be in line for a similar increase next April.”
For pensioners concerned about their finance, Ms Knight had some practical tips. She said: “How much the state pension goes up may be outside your control, but there may be outgoings that you can adjust to provide more financial freedom.
“Given the hike in household bills this Spring, shopping around for cheaper deals is crucially important. Seek support from a relative, neighbour or trusted friend if you feel overwhelmed by the task of switching energy supplier or broadband provider.”
She also encouraged people to check if they can claim any more benefits such as Pension Credit, Housing Benefit or Carer’s Allowance.
