The Office for Budget Responsibility (OBR) has said retired people could see their State Pension payouts rise by as much as 8% from April 2022 due to the UK Government's triple lock guarantee.
The UK’s official forecaster estimated the increase would add around another £3 billion a year to Uk Government spending from its triple lock pensions pledge - on top of what was already budgeted.
The triple lock guarantee means that every year the State Pension will go up by the highest of inflation, 2.5% or earnings during a set period.
But unusually strong recent rises in earnings as a result of the pandemic mean the payout is expected to jump - and prove expensive for the UK Government.
Wage growth has already risen by 5.6% in the three months to April, according to the latest official figures - a lot more than the 4.6% forecast in March by the OBR and it said earnings growth is "almost certain to rise further" before the next State Pension increase is calculated, with many experts predicting wage growth will hit 8%.
The OBR said: "So, if earnings growth in the three months to July period that determines triple lock uprating for next April was 8%, as some expect, that would add around £3 billion a year to spending."
While it may be bad news for the UK Government, whose spending is already under pressure after enormous support measures offered during the pandemic, it will come as welcome news for State Pensioners, who currently receive up to £179.60 a week.
An 8% increase in the period means the full new State Pension would rise from the current maximum of £179.60 a week, by £14.37 to £193.97 from April 2022.
For men born before April 6, 1951 and women born before April 6, 1953 currently receiving the full basic State Pension of £137.60 per week, their payment would increase by £11 per week to ££147.60.
The UK Government has dismissed speculation that it may look to sidestep the triple lock guarantee, insisting in recent weeks that it is "fully committed" to the Conservative Party manifesto promise.
But it comes as a result of artificially high earnings growth, with pay compared with a year ago when wages were depressed with many people being furloughed, while many jobs axed in the pandemic have also been lower-paid roles.
The Prime Minister's official spokesman said last month: "There is still significant uncertainty around the trajectory of average earnings and whether there will be a spike as has been forecasted.
"Our focus is to ensure fairness both for pensioners and taxpayers."
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