The amount pensioners receive in their State Pension from April 2027 will exceed £13,000 a year, following an announcement on Wednesday. The Office for National Statistics (ONS) confirmed that Consumer Prices Index (CPI) inflation was 3.5% in September, up from 3.1% the previous month.
Under the triple lock mechanism, the State Pension rises each year in line with inflation, wages, or 2.5% – whichever is higher. The wage growth figure has already been announced as 3.9%, meaning this will be used to calculate the April State Pension increase.
New payment amounts from April 2027
The rise means some pensioners are heading towards being caught within the tax net, as it will surpass the current personal tax allowance of £12,570. Personal allowance is the amount of income you can receive each tax year before you start paying income tax.
However, the government has said pensioners who are wholly dependent on the new state pension – with no private pension – or the old 'basic' pension, 'with no increments' will not have to pay tax. Chancellor John Healey is expected to provide further detail in next week's Budget.
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.
Triple lock changes planned for 2030
Prime Minister Andy Burnham has previously said that from April 2030, Labour plans to adjust the triple lock, the system used to increase state pensions each April. The state pension overhaul would help to fund a new National Care Service in England. Under the plans, the state pension would continue to rise every year at least by CPI inflation or 2.5%.
State pensions are already expected to equate to around 30% of average earnings by the end of the decade.
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 rally useful. If your employer will increase their contribution if you increase yours, then that can also really pay off long-term.”
