Pensioners could receive another bumper state pension hike in 2024

State pension could rise 7% to £11,342 in 2024 and 17.8% over two years as the Bank of England forecast predicts inflation to remain stubbornly high.

The state pension could rise in accordance with the triple lock in 2024. It will rise by the highest of CPI inflation in September, average earnings between May and June, and 2.5%.

The May Bank of England forecasts reveal that inflation is expected to remain high, dropping slightly from its current level of 8.7% to 7% by September, the point when the state pension rise for 2024-25 will be locked in by triple lock rules.

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CPI inflation of 7% in September would mean that the state pension rises to £11,342 in April 2024. This rise comes after this year’s 10.6% rise, meaning that the state pension could rise by a massive 17.8% in total over two years, up until April 2024.

The triple lock means that income for pensioners is currently rising at a much faster rate than wages, which rose on 6.5% on average in the year up to April 2023.

Source: Assumptions, sources: based on Bank of England Quarterly forecast

Alice Guy, Head of Pensions and Savings, interactive investor, says: “Pensioners could be due another bumper state pension hike next year, with inflation proving a much tougher nut to crack than the Bank of England hoped. Their May forecast predicts inflation will fall slightly from its current rate of 8.7% to 7% in September, the key date for deciding the state pension for next year.

“The state pension forms the backbone of most people’s pension income and a rise in the state pension will be a lifeline to many people on the breadline. There’s a myth that all pensioners are wealthy but this simple isn’t the case with many pensioners relying on the state pension as their main source of income.

“The state pension is also a two-tier system, with older pensioners who retired before 2016 getting a lower basic state pension, only currently worth £8,122 rather than £10,600 for the full new state pension.

“Although the state pension is rising, that doesn’t mean pensioners are feeling any better off as a bigger pension income is cancelled out by rising prices. Many poorer pensioners are facing real hardship as they spend a big proportion of their household income on increasingly expensive necessities such as food and energy.

“Pensioners are one of the most vulnerable groups to rising prices as they have limited options to boost their income. If you have an elderly relative who’s struggling on a low income, then it’s worth checking if they’re entitled to any benefits such as Pension Credit. [This] works by topping up your income to £201 if you’re single and £306.85 if you have a partner, but you could get around £42 to £76 more each week if you have a disability, you care for someone or you’re responsible for a child. You could be entitled to Pension Credit even if you get state pension.

“There are also a large minority of pensioners with housing costs who will be directly or indirectly impacted by rising interest costs. Ii’s 2022 Great British Retirement Survey revealed that nearly one in four (23%) of those over 65 do not own their own home, and a further 6% are still paying off a mortgage. Many of these older people face mounting rental and mortgage costs as inflation and rising interest rates take effect.

“One silver lining is that energy prices are falling and are likely to be lower this winter. Likewise, there are signs that food inflation is beginning to ease and prices are actually falling slightly in some cases.”