The state pension will see its biggest real-term increase in 15 years from April, Baroness Ros Altmann has said.
Speaking in the House of Lords, the pensions minister said from April the state pension would increase by 2.9 per cent - or £3.35 - to £119.30 a week.
This is being done under the government’s “triple lock” of the state pension, which means it goes up by the highest of earnings, prices or 2.5 per cent.
Over this year the increase in average earnings has been 2.9 per cent, more than inflation and more than 2.5 per cent.
Baroness Altmann was speaking as she introduced the motion that would lead to the increase.
She said the full basic state pension will be £1,100 a year more than in 2016 to 2017 compared to the start of the previous Parliament.
Baroness Altmann said: “We estimate that the basic state pension will be around 18.1 per cent of average earnings, one of its highest levels relative to earnings for more than two decades and in contrast to the low of 15.8 per cent which it reached in 2008 to 2009.
“Pensioner poverty now stands at one of its lowest rates since comparable records began.
“Despite the difficult economic decisions that we have had to take, I am pleased to say that this government is spending an extra £2.1bn in 2016 to 2017 on supporting pensioners who have worked hard and done the right thing while continuing to protect the poorest pensioners.”
Baroness Altmann also confirmed that the triple lock would apply to the full rate of the new state pension for the remainder of the Parliament.
The new state pension is set to be introduced in April and is set at £155.65 a week.
The triple lock has proved to be controversial because of its costs, with the Office for Budget Responsibility saying Britain’s ageing population would lead to an extra £79bn in public spending by 2064 to 2065.
The OBR’s welfare trends report said original estimates for the cost of the triple lock were £0.4bn in 2014 to 2015 but because of higher inflation and lower earnings it has ended up costing £2.9bn.
Continuation of the triple lock was a pledge made in the Conservative manifesto before the general election.
