This means payments will far outpace the rise in average wages, which increased 6.5 percent in the year to April 2023.
The current full basic state pension is £156.20 a week, or £8,122 a year, while the full new state pension is £203.85 a week, or £10,600 a year.
If payments increase seven percent next April, the full basic state pension will go up to £167.13 a week, or £8,691 a year, while the full new state pension will go up to £218.11 a week, or £11,341 a year.
Alice Guy, head of Pensions and Savings at interactive investor, said: “The state pension forms the backbone of most people’s pension income and a rise in the state pension will be a lifeline to many people on the breadline.
“There’s a myth that all pensioners are wealthy but this simply isn’t the case with many pensioners relying on the state pension as their main source of income.”
She said pensioners are one of the most vulnerable groups being hit by the rising cost of living due to their limited options to increase their income.
She encouraged pensioners to check if they are eligible for Pension Credit, saying: “If you have an elderly relative who’s struggling on a low income, then it’s worth checking if they’re entitled to any benefits like pension credit.
“Pension Credit works by topping up your income to £201 if you’re single and £306.85 if you have a partner, but you could get around £42 to £76 more each week if you have a disability, you care for someone or you’re responsible for a child.”
A person can claim Pension Credit when they reach the state pension age, which is currently 66, regardless of if they are claiming their state pension or not.
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