The state pension will increase by 2.5 per cent in April 2021, giving some retirees an additional £228.80 a year.
Each year the state pension increases either in line with earnings, the consumer price index (CPI) or 2.5 per cent – whichever is highest.
Known as the triple lock system, it ensures that the state pension remains roughly in line with living costs.
Following a tough year, where inflation was 0.5 per cent in September and earnings have remained low throughout, retirees will rely on the third element of the lock in 2021 and will receive a 2.5 per cent boost.
From April, those on the new full state pension will get an extra £4.40 a week, increasing the weekly pension to £179.60, which results in an extra £228.80 over the following 12-month period.
Those on the old full state pension will still get an extra £3.40 a week, increasing the weekly pension to £137.65 or an extra £176.80 during the next financial year.
However, there is now growing concern that the triple lock may no longer have a future, as the Government seeks to recover the cost of COVID-19 and more attention is given to intergenerational fairness.
Financially, the recent pandemic has been extremely tough on young workers, especially those aged 17- 25, many of whom have seen their income slashed entirely due to the job roles that they hold.
This may make the pension triple lock a target in the upcoming Budget that will take place on 3 March 2021.