The state pension will increase by 2.5 per cent in April 2017, the Department for Work and Pensions confirmed yesterday.

The raised income will mean individuals receiving the flat rate pension will see their payments grow from £155.65 to £159.55 per week. The old state pensions will rise by £3 from £119.30 to £122.30.

While the increase is in line with earnings growth and meets former Chancellor George Osborne’s triple lock promise, set to continue until 2020, Chancellor Philip Hammond hinted in last week’s Autumn Statement that this could be scrapped in years to come.

The New Pensions Landscape report by the Pensions Policy Institute found that the triple lock and automatic enrolment are set to increase retirement incomes, however increasing the state pension age would lead to individuals receiving less on average over their lifetime.

PPI head of policy research Daniela Silcock noted: “For those nearest state pension age, the triple lock has the most immediate effect whereas younger individuals may gain most from automatic enrolment.”

Hargreaves Lansdown head of retirement policy Tom McPhail said: “A wide range of politicians and economists now argue that the Triple Lock is redundant, with the 2.5 per cent element in particular being called into question. It is ironic therefore that earnings growth happens to have landed bang on 2.5 per cent, thereby making the third element of the Triple Lock redundant this year. There is a fair bet that this time next year, it'll be inflation hitting the highest number.

“Pensioners can't continue to enjoy indefinitely a 'heads I win, tails you lose' guarantee at the expense of taxpayers. A review now looking beyond 2020 makes sense. The point of caution in favour of those approaching retirement is that final salary pay outs are about to start diminishing and some are arguing that existing private pension inflation proofing should be cut. Politicians have to strike a delicate balance but if they take too much away from pensioners they could end up sowing the seeds of the next pensioner income crisis.”

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