Following the Labour Party‘s victory in the general election on 4 July, millions of older people in the UK can expect the triple lock policy, which guarantees safe payments of the state pension, to be maintained. Pensioners may be able to claim up to £938 per month under this policy.
The Triple Lock mechanism guarantees an annual increase in the new pension and basic pension in line with the highest of three indicators: The annual increase in the average weekly wage from May to July, the Consumer Price Index (CPIH) including the cost of owner-occupied housing, and the replacement interest rate of 2% for the period from September of the previous year to September of the current year.
According to a survey by the UK Office for National Statistics (ONS), the inflation rate has reached 2.8%. It averaged 0% in May and is likely to remain stagnant throughout the year. This will have an impact on the triple lock increase due in mid-October. For the highest average monthly earners, the annual wage supplement and bonus reached 5% between February and April.
The current value under the triple lock is the highest it has ever been, suggesting that the state pension increase for the 2025/26 financial year is tied to this value.
Future Pension Increases
The final Triple Lock income increase figures are due to be published by the ONS on August 13th. According to the Daily Record, if current trends continue, around 12.7 million state pensioners in England, including more than 1.1 million in Scotland, could see their pensions increase to £234.45 per week, or £937.80 per four weeks.
For the 2024/25 tax year, new and basic state pensions have been increased by 8.5pc, reflecting the income increase measures. As a result, new full state pension recipients will receive £221.20 per week, which equates to £884.80 per four weeks. Those on full basic state pensions will receive £169.50 per week, or £678 per four weeks.
Should the 5.9pc increase be applied, pensioners could receive:
- Full New State Pension: £234.45 per week, £937.80 every four weeks, totalling £12,191.40 annually for 2025/26.
- Full Basic State Pension: £179.65 per week, £718.60 every four weeks, totalling £9,341.80 annually for 2025/26.
These forecasts are based on current ONS data, with headline income increases for May to July due to be published on 13 August.
It is also important to note that the September Consumer Price Index shows that state pension top-up payments and state pension deferrals have increased annually. The UK Government typically confirms such increases in its Autumn Statement in November.
State Pension and Tax Implications
Spencer Churchill experts predict that around 900,000 more pensioners will exceed this threshold during the current financial year, and a further 2 million will do so by 2028, the timetable set out by the previous Conservative government.
The full new state pension for the 2024/25 financial year will be £11,502, leaving just £1,068 to reach the personal tax threshold. Consequently, anyone earning an extra £89 or more a month could be taxed on top of their state pension next year.
Those receiving the full basic state pension will receive £8,814 this year, leaving them with £3,756 to cross the personal tax threshold, which equates to an extra £313 a month in income.
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