The Government has announced plans for a "triple lock" method of calculating the annual rise, which it claimed would lead to bigger increases and higher living standards for the elderly.
But many experts have questioned the formula, insisting it would actually make pensioners worse off.
Now Steve Webb, the pensions minister, has confirmed that far from profiting from the move, pensioners could be £1 a week poorer because of it, and the basic state pension could rise by less than inflation in 2012.