State pension hike in April revised after new wage data.

The updated state pension for individuals who reached retirement age after April 2016 may increase from £221.20 to £230.30 starting in April. Meanwhile, the previous basic state pension could see a rise from £169.50 to £176.45. Check out this and more of today’s consumer and personal finance updates below.

The government is anticipated to incur an additional £100 million expense for state pension increases next April, based on today’s wage data. Rising expectations for a UK interest rate cut in November have emerged following a slowdown in wage growth, which has reached its lowest level in over two years.

According to official statistics, pay increased by 4.9% from June to August, a decrease from the previous rate of 5.1%. These figures have fueled speculation that the Bank of England may lower interest rates to 4.75% during its meeting next month. While wages are still growing at a pace that outstrips inflation, which reflects the rate of price increases, analysts believe this won’t hinder the Bank's plans for a rate cut. The Bank of England closely monitors wage growth, as rapid increases in pay can lead to higher costs for businesses, prompting them to raise prices to maintain their profit margins.

Thanks to the triple lock system, the state pension rises every April according to the highest of average earnings growth from the previous July, inflation from the previous September, or a minimum of 2.5%.

This year, wage growth is expected to be the highest. The Office for National Statistics (ONS) initially reported a 4% figure for July, but this has now been adjusted to 4.1%. A former pensions minister has indicated that this could lead to significant costs. Sir Steve Webb mentioned that the extra 0.1 percentage point could result in an additional £100 million added to the state pension expenses.

"While a slightly higher increase is beneficial for pensioners, it will create an unwelcome £100 million burden for the chancellor as she prepares her budget," he noted. "The new state pension will be approaching £12,000 annually, very close to the £12,570 tax-free personal allowance.

New Pension

This situation may increase pressure on the chancellor to address tax allowances in the near future." What will the new pension amount be? With the revised wage growth figure, the new state pension for those who reached state pension age after April 2016 could rise from £221.20 per week to £230.30. Meanwhile, the old basic state pension could see an increase from the current £169.50 per week to £176.45 next year.

Related: PensionBee vs Penfold