Pensioners will see their state pension rise by 10 per cent next year despite ministers demanding below-inflation increases for public sector workers.
The Treasury said it planned to return to the system by which the annual state pension rises by inflation, average earnings or 2.5 per cent, depending on which is highest.
The rise, which will come into effect in April next year, will be based on this September’s CPI, expected to be about 10 per cent. This will result in an additional taxpayer spend of £10 billion on state pension payments if inflation does hit 10 per cent, worth about £960 to an average pensioner. Pensions rose by 3.1 per cent this April, when inflation was running at 7.8 per cent, as the rate