The state pension looks set to rise by up to £562 next year , but experts have warned most of this will be “eaten up” by rising costs, potentially leading to retirees paying tax on their state pension by 2027.

The state pension increases every year in line with the highest of July’s wage growth, September’s inflation data, or 2.5 per cent under the ‘triple lock’ guarantee.

Wage growth for the months May to July was 4.7 per cent, which makes it likely that this figure will be used for next year’s annual increase. New Feature

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However, experts have warned that this increase will largely go towards covering rising living costs, so it is unlikely to feel like a full extra £500 in people’s pockets.

Steve Webb, former pensions minister

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