The triple lock is expected to increase state pension payments to as much as £250.70 per week next year, experts are predicting. The mechanism, which has been the subject of debate over the past few weeks, means the state pension rises by either wage growth, inflation or 2.5%, whichever is highest.
Wages are expected to be the determining factor in April 2027, with experts forecasting an increase of around 3.9%. This is welcome news for many state pensioners.
Tax threshold concerns
While concerns have been expressed over state pension earnings surpassing the personal allowance, Andy Burnham's Labour government has ensured that retirees who rely solely on the state pension will not be subject to income tax. However, the same is not true for older Brits with another form of income on top of the state pension.
The full new state pension would rise to £250.70 per week, or £13,036.40 a year, if the 3.9% increase is applied.
Impact on pensioners with additional income
Finance experts at Anna have warned that the increased state pension payments will push pensioners further over the tax threshold of £12,570. That could mean more of their private pension or other earnings move over that limit, making more of it taxable.
Announcing the 2025 Autumn Budget, then-chancellor Rachel Reeves promised that the government were "ensuring that people only in receipt of the basic or new State Pension do not have to pay small amounts of tax through simple assessment from April 2027". Pensions minister Torsten Bell has since confirmed the new Andy Burnham government will stick to this pledge.
"In line with the commitment made at Budget 2025, pensioners who only just exceed the personal allowance will not have the administrative burden of paying small amounts of tax in this Parliament," he said. "The chancellor will set out further details on how that commitment will be delivered at the Budget."
However, if you have income from another source, such as a private workplace pension or part-time work, you will likely have to pay income tax, reports Money Week. Your private pension provider usually calculates your tax and deducts it from your payments via PAYE, as would have been the case when you were earning wages in a full-time job.
The Personal Allowance has been frozen since 2021/22 and is expected to stay the same until April 2031, which has sparked debates about the longevity of the triple lock system.
