State pension payments go up in line with the triple lock (Image: Getty)
The triple lock could deliver another sizeable increase to the state pension next April. State pension payments went up 4.8 per cent in April thanks to the policy.
The Government policy mandates that payments go up each April in line with the highest of 2.5 per cent, the rise in average earnings or inflation. This has resulted in some large pay increases in recent years, including a record 10.1 per cent uplift in April 2023.
This was prompted by soaring inflation as the impact of the Ukraine war caused a sharp uptick in energy prices and the wider cost of living. Now the Iran war has already spiked oil prices and may cause longer-term increases to the cost of living over the coming months, raising the question of whether there could be another large state pension increase next April.
A much bigger pension increase
Jinesh Vohra, CEO of mortgage cashback app Sprive, gave his thoughts on this. He said: “If inflation were to re-accelerate materially by the September 2026 reading, that would feed directly into next year’s uprating calculation. But a 10.1 per cent style increase is not the base case today.”
He looked at the latest figures and what this could mean for the months ahead. The expert said: “The latest official CPI reading was 3.0 per cent in February, and before the latest escalation, the Bank of England expected inflation to fall to 2.1 per cent in the second quarter.
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“So a much bigger pension rise next year is possible only if this shock proves severe enough to push inflation far above where it was expected to go.” He spoke about the short-term effects on people’s finances.
Immediate impact
Mr Vohra said: “The more immediate impact of high inflation on households in the UK is the cost of living, and higher mortgage repayments. Rates have already moved past five per cent, and some deals are over six per cent, meaning thousands extra per year for homeowners.”
Neel Thakrar, CEO of cashback app Tuck, also said there could be a big state pension increase next year. He said: “If we do see a meaningful inflation spike through energy costs, pension increases would follow.
“The 10.1 per cent year was genuinely unusual, but it wasn’t impossible, and the conditions that created it aren’t entirely off the table. Whether the Government would honour it in full is another question – there was enormous political pressure in 2023, and that conversation would resurface quickly if we hit anything close to those numbers again.”
How long could the impact of the Iran war affect the cost of living?
Asked if the Middle East conflict could impact people’s finances for years to come, Mr Vohra said: “Even if the military side de-escalates, mortgage rates, energy markets, and lender pricing do not instantly reset.
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“JPMorgan has said oil could move above $150 if disruption persists, while the IMF and IEA warn even a relatively swift resolution would leave inflation elevated and growth weaker.
“My base view is that the consumer impact could easily last well beyond the headlines. Homeowners may face elevated mortgage payments for multiple years, and higher bills will continue to pressure household budgets.”
Mr Thakrar warned that economic shocks like this work through the system “slowly”. He explained: “The secondary effects – energy infrastructure adjustments, supply chain rerouting, inflationary pressure – can linger for two or three years.
“The households that cope best tend to be the ones who build small, consistent habits rather than waiting for one big fix. We see that reflected in our user data – the people who’ve saved the most through tuck. aren’t doing anything dramatic, they’ve just made it part of their routine.”
You can use tuck. to get cashback on your shopping at many big name brands and supermarkets. The Sprive app also offers cashback on your shopping at a host of big retailers, but this is used to overpay your mortgage.