People who claim the state pension could see a record rise to their payments next year, with some people seeing their pension increase by £15 a week.
Every year the state pension will go up by the highest out of inflation, 2.5% or average wage growth under an agreement called the triple lock. All governments have backed this since it was introduced in 2010.
The triple lock is set to work in pensioners' favour next year, because wage growth rose 8.4% in the year to April, according to the Office for National Statistics this week - reports Mirror Online.
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This record rise in wages is because average earnings were lower during lockdown, then rose again as the country began to return to work.
An 8.4% increase would mean the current full state pension rises £15 a week. That means the current maximum of £179.60 a week would be £194.60 from April 2022.
The actual amount you get depends on your National Insurance record.
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Older pensioners who claim the basic state pension, currently no more than £137.60 a week, would get an extra £11.55, taking the total to £149.15.
This is open to men born before 6 April 1951 and women born before 6 April 1953.
The 8.4% rise would mean the Treasury spends more than £7billion on the state pension in 2022, £5billion more than the guaranteed £2.1billion under the triple lock.
But some Conservative MPs want to water down the massive increase, arguing the country cannot afford it when it already has a huge bill for Covid-19.
Despite popular belief, there is no state pension retirement 'pot' that is built up as we work and pay National Insurance.
Instead, the state pension for retirees today is paid by people currently working.
Because of this, MPs also think workers will object to a big state pension rise when many have had pay and benefits slashed during the pandemic.
Speaking to the Telegraph, Nigel Mills, Tory chairman of the all-party parliamentary group on pensions, said: “The triple lock wasn't meant to be based on artificially out-of-line earnings data.”
Chancellor Rishi Sunak has already reportedly considered watering down the triple lock, even before the rise in wages.
However, the current 8.4% increase could also change slightly in the next couple of months.
This is because any increase would look at average earnings from May to July this year to the same period last year. But the 8.4% increase in April is a strong sign that a wages boom will continue.
The state pension increase is signed off in November every year.
Sarah Coles, a personal finance analyst at Hargreaves Lansdown, said pay could rise even further.
She said: "We’re likely to see some eye watering average pay rises in the coming months. We’re now comparing wages to the height of the crisis in 2020, when pay fell back for a number of months. A wild wage inflation figure would push pension rises through the roof.”
This April the state pension rose by 2.5% a week thanks to the triple lock.
The state pension is usually paid every four weeks, in arrears.