The state pension is set to increase thanks to official guarantees on future payments
Millions of pensioners look set for an increase of up to £538 in their state pension from April – thanks to the Government’s triple lock guarantee. The system promises that the pension will rise each year by the highest of inflation, average earnings growth, or 2.5 per cent.
And with wage growth currently outpacing inflation, this is likely to set next year’s increase. Figures from the Office for National Statistics show pay packets in the year to April–June grew by 4.6%. The final figure that matters for the triple lock is for May-July – due next month – but experts say the outcome is already in sight.
At present, the full new state pension is £230.25 a week, or £11,973 a year. A rise of 4.0 – 4.5% would take it to between £12,451 and £12,512 – an extra £478.92 to £538.79 a year.
“This isn’t the crunch month for the triple lock, but we’re not far off now. Total pay is up 4.6 per cent in the year to April–June, and it’s the May-July figure that counts for the triple lock,” explained Sarah Coles, head of personal finance at Hargreaves Lansdown.
“A rise of 4.0 to 4.5% means the state pension would be between £12,451 and £12,512. This would bring it within touching distance of the personal allowance – so anyone with even a very modest personal pension income could end up paying income tax.”
The standard personal allowance – the amount you can earn before paying income tax – is £12,570. That means someone on the full state pension would only need an extra £59 a year from other sources such as a private pension, savings, or rental income before paying basic-rate tax.
The Treasury will confirm the final rise in the autumn, with Parliament needing to approve it in March before it comes into effect in April 2026.
“The Bank of England expects inflation to ease in the coming months, so that by the time we get to the state pension rise in April next year, this increase might be well ahead of annual price rises at the time,” Ms Coles continued.
“Of course, this is only part of the picture. Inflation has been particularly focused on household bills and food prices, which pensioners on lower incomes spend a larger proportion of their income on. It means many of those who rely heavily on the state pension will be holding their breath for the rise in the spring.”
AT A GLANCE
- Current full new state pension: £230.25 a week / £11,973 a year
- Expected rise (April 2026): 4.0 – 4.5%
- Increase in cash terms: £478.92 – £538.79 a year
- New annual total: £12,451 – £12,512
- Personal allowance (tax-free threshold): £12,570
- Extra income before tax kicks in: Just £59 if on full state pension
- Final decision: Autumn announcement, confirmed by Parliament in March