The Treasury is to increase the basic state pension from April in its biggest rise in real terms since 2001.
The BBC reports Chancellor George Osborne will confirm the increase to £119.30 a week as part of the Autumn Statement and Spending Review on Wednesday.
The 2.9 per cent rise will be worth an extra £174.20 a year to someone on a full basic state pension, and will push total spending on the state pension to £95bn.
Pensions minister Ros Altmann said: “Over the last quarter of a century, pensioners have fallen below the rest of society as average earnings have done so much better than the increases in the state pension.
“Since 2010, we have really begun to correct that.
‘We are now back to the highest level for a quarter of a century – and quite right too. Pensioners deserve to be treated much better than they have been in the past and to have security in retirement.”