Older state pensioners across the UK are set to receive a weekly payment increase from the Department for Work and Pensions (DWP) from next April, following the annual State Pension rise at the start of the new tax year.
The new rates are calculated using the triple lock mechanism, which sets the annual increase by whichever is highest out of the consumer price index (CPI) measure of inflation for September, average wage growth between May and July, or 2.5%.
3.9% Rise Expected
Under this guarantee, pensioners are on course for a 3.9% State Pension boost, with the average wage growth figure expected to be used for the 2027 to 2028 rates. The Office for National Statistics (ONS) reported CPI inflation at 3.5% in September, below the 3.9% wage growth figure and the minimum 2.5% increase.
A 3.9% increase is expected to be confirmed in Wednesday's Autumn Budget, taking the basic State Pension from £184.90 per week to £192.10. This would give older pensioners eligible for the full amount a weekly increase of £7.20 from April 2027.
Impact on Payments
Over a full year, this amounts to £9,989.20 in State Pension payments, providing older pensioners up to £374.40 extra annually under the new rates. These figures are based on the maximum amount for those with a full qualifying National Insurance record, so those without enough qualifying years will receive less.
For younger pensioners on the new State Pension, a 3.9% increase would give claimants an extra £9.40 per week if they receive the full amount, with the weekly rate rising from £241.30 to £250.70. Over a year, this totals £13,036.40, an annual boost of £488.80 for those eligible for the maximum amount.
Tax Considerations
With the personal tax allowance frozen at £12,570, the uplift could mean some state pensioners may be caught within the tax net for the first time. The Government has said pensioners wholly dependent on the new State Pension, with no private pension, or the old basic State Pension, with no increments, will not have to pay tax.
Further details on the policy are expected in the Budget on October 28. Claire Trott, head of advice at St James's Place, said: "While the uplift in income will be welcomed by many, it also marks a significant milestone, with the full new state pension exceeding the £12,570 personal allowance for the first time."
