State pensioners across the UK are on course to receive boosted weekly payments of up to £250.70 from next April under Andy Burnham's government. The State Pension is uprated at the start of every new tax year on April 6, and this increase is determined in line with the triple lock.
The triple lock is a Government guarantee that the State Pension will rise every April by whichever of the three key measures is highest: the consumer price index (CPI) measure of inflation (measured for September of the previous year), average wage growth between May and July of the previous year, or 2.5%.
Triple Lock Rise Confirmed
While the Prime Minister has said he intends to scrap the triple lock in 2030 in favour of a 'double lock' system, the current method of calculating State Pension rises will remain in place until then. As such, State Pension rates for the 2027 to 2028 tax year will rise by the highest out of the triple lock factors, which has been revealed as average wage growth at 3.9%.
The Office for National Statistics (ONS) on Wednesday (October 21) announced that the rate of CPI inflation was 3.5% in September, accelerating from 3.1% in August, but this doesn't beat the 3.9% wage growth figure that has already been published.
New Weekly Payment Amounts
It means that pensioners are on course for a 3.9% boost to State Pension rates from April 6, 2027, now that the final piece of the triple lock puzzle is known. This uplift would mean pensioners on the full new State Pension would see their weekly payments rise from £241.30 per week to a boosted £250.70 per week from next April.
Over a full year, this amounts to £13,036.40 in State Pension payments, giving those eligible for the maximum amount an annual boost of £488.80. This uplift would apply to new state pensioners who reached State Pension age from April 6, 2016, when the qualifying age was set at 63 to 65.
This later continued to rise to age 66, meaning new state pensioners will now all be aged under 77. As for older pensioners who get the old basic State Pension, a 3.9% increase would take rates to £192.10 per week, up from £184.90, giving pensioners entitled to the full amount £9,989.20 in State Pension payments per year—an annual boost of £374.40.
Future Changes and Tax Implications
Of course, these figures are based on the maximum possible amount for those with a full qualifying National Insurance record, so those without enough qualifying years will receive less. The Prime Minister has said he will honour the Labour manifesto promise to keep the triple lock unchanged throughout this Parliament, but from April 2030 this will be adjusted.
From this point, he has proposed that the State Pension will continue to rise every year at least by prices or 2.5%—removing the link to average earnings—with the savings generated from this change to be used to "build up our National Care Service". Mr Burnham said the State Pension "will hold its value relative to earnings over time so that pensioners will always share in the rising prosperity of the nation".
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: "The State Pension is, and will remain, a firm foundation on which to build your retirement income. However, the reality is it is only going to cover the basics no matter how it is increased. If you want to maintain the lifestyle you enjoyed while working, it’s important to make the most of your pension.
"Taking small steps, such as boosting contributions whenever you get a pay rise or promotion, can be really useful. If your employer will increase their contribution if you increase yours, then that can also really pay off long-term."
As the personal tax allowance has been frozen at £12,570 since 2021, a 3.9% uplift would mean state pensioners will be caught within the tax net for the first time. So far, the Government has said pensioners who are 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, but it is still unclear exactly how the policy will work.
The Government is expected to set out further detail in the Budget on Wednesday, October 28. Rachel Vahey, head of public policy at AJ Bell, said: "Pensioners are set to receive just shy of £500 extra in their State Pension next year. The full new State Pension is set to surge past £13,000 for the first time, leaving the frozen £12,570 personal allowance trailing in its wake.
"The Government has promised that those living solely on a State Pension above the allowance will not pay income tax on it—but the crucial detail on how that will work is still missing. Pensioners are now looking to next week’s Budget to fill in the blanks."
