State pensions will rise by £4.40 a week next year, the smallest possible increase, after the withdrawal of the Eat Out to Help Out scheme hit inflation

The state pension is set to rise just £4.40 a week next year, in the smallest rise allowed by legislation.

The increase means the ‘new’ basic state pension is set to rise from £175.20 to £179.60 a week – representing £228.80 a year.

The ‘old’ basic-rate state pension will rise by £3.40 a week from £134.25 to £137.65.

The rise – representing 2.5% – will be confirmed later by the government, but is all but certain after inflation figures for September came in at just 0.5%.

Under current rules, pensions rise every year by the highest of prices, earnings or by 2.5%.

With earnings hammered by coronavirus and prices creeping up just 0.5%, that means the 2.5% figure will be used to set pension in 2021.