The basic state pension will rise to £119.30 a week from April 2016, the Treasury confirmed.
Chancellor George Osborne will highlight the £570 a year rise in his Autumn Statement next week, despite criticisms of the protections being afforded OAPs at a time of deep cuts to working-age welfare and public spending.
The 2.9% rise matches the rise in average earnings - one of the three "triple lock" safeguards in place to ensure pensioners receive a minimum of 2.5% extra each year, regardless of low inflation.
It will take total spending on the state pension to £95 billion next year.
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.
'They've done their best for society, worked hard, and we owe them."