The state pension is to rise by double the rate of inflation as a result of the coalitions triple lock policy, pensions minister Steve Webb announced yesterday.
All pensioners will receive a 2.5% increase on the payment, equivalent to £2.85 a week. And around 900,000 of the poorest pensioners will benefit from an increase in the standard minimum guarantee for Pension Credit, which is rising to £151.20
Announcing the increase, Webb said: 'The triple lock is one of the defining policies of this government - a policy which rewards those who have worked hard and saved hard throughout their lives.'
The state pension was now at its highest relative to earnings since 1992, he added.
'With inflation remaining low by historic standards and the rise in average earnings at around 0.6%, under previous arrangements the basic state pension may only have gone up by around 70p per week this year - the kind of insulting treatment of pensioners which we won't allow to happen.'
Commenting on the rise, Morten Nilsson, chief executive of NOW: Pensions said that, while the rise was good news, savers shouldn't be lulled into a false sense of security.
'Research we recently conducted with 100 cross-party MPs revealed nearly one in six think the state pension will be extinct in 30 years' time or if there is one, it will be at a considerably lower level,' he said.