Calling the Triple Lock a “lifeline for many pensioners during a time of inflation”, the Chancellor said the Government will honour its commitment in full.

The promise means that the ‘new’ State Pension will increase 8.5% from April to £221.20 a week. This represents an increase of £900 a year.

The Chancellor said: “That is one of the largest ever cash increases to the State Pension, showing a Conservative Government will always back our pensioners,” 

Tom Selby, head of retirement policy at AJ Bell, said retirees will be relieved to hear confirmation of their “inflation busting” State Pension increase next year.

He said: “There had been suggestions the Treasury was considering arguing NHS bonus payouts had inflated July’s earnings figure and instead opt for the lower 7.8% figure, which strips out bonuses. This could have saved the Exchequer somewhere in the region of £1 billion but would also have left the chancellor open to the accusation of shifting the state pension goalposts.

“Given where the Conservatives find themselves in the polls and the fact older people hold huge sway at the ballot box, it is hardly surprising they opted to target fiscal restraint elsewhere.”

A bumper increase for pensioners in 2023, and the prospect of another for 2024, have led to some people raising questions about when and whether the Triple Lock should stop and what will replace it.

Sian Steele, head of tax at Evelyn Partners, said many in the Treasury may see today’s confirmation of the Triple Lock as a missed opportunity.

She said:  “With an election on the horizon, the political consequences of tinkering with the Triple Lock might have figured in the Chancellor’s calculations. Whether the State Pension can be increased in the same way over the long term alongside an ageing population is another question.

“With the inclusion of bonuses in the earnings element of the Triple Lock, many in the Treasury are probably lamenting a missed opportunity to save the public purse some extra outlay. 

“The 8.5% hike now nailed on for April means the state pension will cost the Treasury £2billion more in 2024/25 than the Office for Budget Responsibility forecast at the Spring Budget and that comes hot on the heels of this April’s bumper 10.1% state pension hike, which added £11 billion to Government spending in 2023–24.

“Adjusting down the prescribed rise for April to 7.8% - the rate of earnings growth excluding bonuses - would inevitably have attracted criticism, and might not have saved a huge amount for the public purse. But it would arguably have been quite a sensible alteration.

 “The surprise is more that successive governments have allowed bonuses to be included in the calculation, as they are volatile and something that only a small proportion of the working population benefit from – and this year’s figure was particularly distorted by a one-off NHS deal. It’s also not clear why the inflation and earnings growth elements of the triple lock are taken from one month and three months respectively, rather than longer periods that would give a more stable and accurate picture. “

Chancellor Jeremy Hunt also confirmed that state benefits would also increase in line with inflation from April as “cost-of-living pressures remain at their most acute for the poorest families.”

State benefits will increase 6.7% in line with September inflation figures. There had been speculation that benefits would instead rise by October’s lower 4.6% inflation figure.

The increases will apply to working-age benefits including means-tested benefits such as Universal Credit and disability benefits.