Pensioners in the UK are expected to receive a notable financial boost from April next year, with the state pension projected to rise by more than £550 under the triple lock system.
The increase comes after new economic data confirmed that wage growth is the highest of the three triple lock measures: inflation, wage rises or 2.5 per cent.
The triple lock is designed to ensure pensioners’ incomes keep pace with rising living costs. However, with people living longer and the overall pension bill expanding rapidly, many experts believe the system is likely to face reform in the coming years.
Chancellor Rachel Reeves announced that the state pension will increase by around £550, which is higher than the current inflation rate of 3.6 per cent. She said the government’s approach was rooted in supporting older people, explaining that “whether it’s our commitment to the triple lock or to rebuilding our NHS to cut waiting lists, we’re supporting pensioners to give them the security in retirement they deserve,” and added that the upcoming Budget would outline “the fair choices to deliver on the country’s priorities to cut NHS waiting lists, cut national debt and cut the cost of living.”
The full new state pension currently stands at £230.25 per week, totalling £11,973 annually. With earnings growth measured at 4.7 per cent, payments are expected to rise to £241.05 per week. This represents an annual increase of £561, bringing the total to roughly £12,534 for those receiving the full new state pension.
These figures apply only to those eligible for the full new state pension. Pensioners on the older basic state pension receive increases calculated differently, with part of their payment rising only in line with inflation.
While the increase will be welcomed by many, it could push some pensioners into paying income tax for the first time. A full new state pension of £12,534 would account for 99.7 per cent of the current personal allowance of £12,570, according to analysis from Standard Life.
Mike Ambery, retirement savings director at Standard Life, said the uplift would offer “some comfort for pensioners grappling with rising bills and the lingering effect of inflation on everyday essentials,” but warned that because the personal allowance is frozen until 2028, a full new state pension will be over 99 per cent of it. As he put it, this means pensioners “will need just £35.40 of other income before paying income tax.”
He also highlighted that freezes to the personal allowance, combined with inflation, mean a greater portion of pensioners’ income is now taxable. For those paying higher-rate tax, the real value of the £561 rise could fall to around £337.
The increase is expected to reignite debate over whether the triple lock is sustainable. Despite this, the government has reiterated its support. Pat McFadden, the work and pensions secretary, confirmed that Labour will honour the promise, stating that “this Labour government is committed to maintaining the triple lock for the course of this parliament,” and that this commitment is expected to mean “a rise in the state pension of around £1,900 a year by the end of the parliament.” He emphasised that this was a pledge made during the election that the government “will keep to.”
However, policy experts say a difficult decision looms. Rachel Vahey, head of public policy at AJ Bell, explained that the latest increase pushes the state pension “perilously close to the frozen personal allowance,” creating a significant dilemma for the Treasury. She noted that if the triple lock results in the state pension exceeding the personal allowance by April 2027, the government will face increasing pressure to either raise the allowance or reconsider the triple lock. She warned that lifting the allowance would be costly at a time of limited fiscal headroom, while altering the triple lock could carry major political risks ahead of the next general election.
The standard personal allowance remains at £12,570, covering income from pensions, employment, property or dividends. Only income above that threshold is taxed.
These numbers apply to the new state pension; individuals on the basic state pension, typically men born before 1951 and women born before 1953, follow different rules.
Looking ahead, the Bank of England expects inflation to fall in the coming months. Sarah Coles, head of personal finance at Hargreaves Lansdown, said that by the time the April 2025 increase arrives, the state pension rise “might be well ahead of annual price rises at the time.” However, she cautioned that inflation has been concentrated in essentials such as food and energy — expenses that pensioners on lower incomes spend a larger share of their money on — meaning many will be “holding their breath for the rise in the spring.”
