More than 13 million people of State Pension age across the UK, including 1.1 million in Scotland, will see their payments rise by 3.9 per cent from next April. New figures published on Wednesday by the Office for National Statistics (ONS) confirm the Consumer Price Index (CPI) inflation rate for the year to September was 3.5 per cent.
This means the annual State Pension uprating under the Triple Lock will be determined by the earnings growth figure of 3.9 per cent. People on the full New State Pension will receive almost £490 more over the 2027/28 financial year.
Triple Lock Uprating Confirmed
Under the Triple Lock, the New and Basic State Pensions increase each April in line with whichever is highest of average annual earnings growth from May to July (3.9%), CPI inflation in the year to September (3.5%), or 2.5 per cent.
The Labour Government has committed to maintaining the existing Triple Lock policy throughout this Parliament, with changes to the uprating mechanism due to take effect from April 2030.
While Wednesday's inflation announcement will establish which measure determines the annual increase, the new payment rates are expected to be formally confirmed by Chancellor John Healey at the Autumn Budget on October 28.
New Payment Rates from April
The 3.9 per cent increase will see the full New State Pension increase from £241.30 to around £250.70 per week, while the full Basic State Pension would rise from £184.90 to around £192.10.
This uplift would take the full New State Pension above £13,000 a year for the first time.
Commenting on the new figures, David Brooks, Head of Policy at independent pensions consultancy Broadstone, said: “The crucial inflation print for the Triple Lock came in below earnings data, meaning that the State Pension now looks set for a nearly £500 boost from next year. With cost of living pressures tightening once more, this will provide much-needed breathing space for lower-income pensioners.
“The Prime Minister's significant intervention on the future of the Triple Lock has brought the debate around the long-term sustainability of State Pension increases sharply into focus.
“While there is consensus around annual uprating, the next few years are likely to see intense scrutiny around the most appropriate mechanism for protecting pensioners' incomes, controlling this growing cost to the taxpayer and ensuring that future generations can rely on an adequate State Pension.”
Forecast Rates for 2027/28
It's worth remembering the Chancellor will confirm the annual uprating at the Autumn Budget on October 28, however, an uprating of 3.9 per cent would see people receive the following amounts.
Full New State Pension
- Weekly: £250.70 (from £241.30)
- Four-weekly pay period: £1,002.80 (from £965.20)
- Annual amount: £13,036 (from £12,547)
Full Basic State Pension
- Weekly: £192.10 (from £184.90)
- Four-weekly pay period: £768.40 (from £739.60)
- Annual amount: £9,989 (from £9,614)
It's also important to remember that the amount someone receives depends on their National Insurance contribution record and not everyone qualifies for the full rate.
Additional State Pension and Tax Implications
The September CPI figure of 3.5 per cent also determines the annual increase for Additional State Pension elements, including SERPS and State Second Pension, along with certain deferred State Pension increases.
Unlike the main New and Basic State Pension rates, these payments are uprated in line with September CPI inflation rather than the highest of the three Triple Lock measures.
The Personal Allowance is currently frozen until April 2031, meaning people with additional taxable income from workplace pensions, private pensions, employment or savings could face higher Income Tax bills. However, the Labour Government has said pensioners whose sole income is the New State Pension will not have to pay Income Tax on those payments.
Claire Trott, Head of Advice at St. James’s Place, warned that the increase could also have tax implications for pensioners receiving income from other sources.
She 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. Although those receiving only the State Pension are not expected to face a tax bill, pensioners who draw on other sources of income, such as workplace or private pensions, savings or earnings from work may find themselves with a higher tax liability as a result.
“It's therefore worth taking a closer look at your retirement income ahead of April to make sure you understand what the changes could mean for you and plan accordingly.”
Guidance on GOV.UK advises that Income Tax may be payable if someone's total annual income exceeds their Personal Allowance. This can include State Pension payments, workplace or private pensions, earnings from employment, taxable benefits and income from savings or investments.
People can check whether they may need to pay Income Tax on their pension using the free online tool on GOV.UK.
