The full new State Pension is set to rise to £250.70 a week and £13,036 a year from April 2027, after the Office for National Statistics (ONS) confirmed that wage growth of 3.9% will be the measure used under the triple lock guarantee. The announcement follows the ONS confirming that the Consumer Prices Index (CPI) inflation rate stood at 3.5% in September, up from 3.1% the previous month.
Triple Lock Uplift Confirmed
Under the triple lock guarantee, the State Pension increases annually in line with inflation, wage growth, or 2.5% – whichever figure is greatest. With wage growth already confirmed at 3.9%, this will be the measure used to determine the April uplift, as it is higher than both the inflation rate and the 2.5% floor.
This anticipated increase means that those claiming the State Pension will receive the following from April 2027: the full new State Pension will be £250.70 a week (up from £241.30), which is £13,036 per year; the full basic State Pension will be £192.10 (up from £184.90), which is £9,989 per year.
Tax Concerns and Government Clarification
The rise has raised concerns that some pensioners could find themselves drawn into the tax net, as the new figure will exceed the current personal tax allowance of £12,570. The personal allowance represents the amount of income individuals can receive each tax year before income tax becomes payable.
However, the government has clarified that pensioners wholly reliant on the new State Pension – with no private pension – or the old 'basic' pension, 'with no increments' will not be liable for tax. Chancellor John Healey is anticipated to shed further light on the matter in next week's Budget, reports the Manchester Evening News.
Expert Comment and Future Reforms
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."
She added: "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 rally useful. If your employer will increase their contribution if you increase yours, then that can also really pay off long-term."
Prime Minister Andy Burnham has stated previously that Labour intends to modify the triple lock from April 2030, the mechanism currently used to uplift state pensions each April. The state pension reforms would contribute towards funding a new National Care Service in England. Under these proposals, the state pension would continue to increase annually by at least CPI inflation or 2.5%.
This comes as state pensions are already projected to equate to approximately 30% of average earnings by the end of the decade.
