State pension set to rise 4.6% to £102

THE full basic state pension will rise from £97.65 to £102.15 next April, based on official figures published this week.

Annual pension payment increases are based on inflation the previous September, rising in line with whichever is highest out of average earnings growth, the retail prices index (RPI) measure of inflation or 2.5 per cent. The basic state pension will increase by RPI, which was 4.6 per cent in September, according to the Office for National Statistics, although the rise in subsequent years will be in line with the consumer prices index (CPI), which stayed at 3.1 per cent last month.

The Isa allowance will also rise in line with inflation from next April, from 10,200 to 10,680, including up to 5,340 into a cash Isa.

However payouts from public sector pensions, the state second pension and some private sector final salary pensions will rise by just 3.1 per cent from next April.