More than 12 million pensioners across the United Kingdom will see their state pension payments increase from this week, following the Government’s confirmation of a 4.8 per cent uplift under the triple lock mechanism. The rise, which took effect from Sunday 6 April, delivers annual gains of between £439 and £575 depending on which rate a pensioner receives.
The Department for Work and Pensions confirmed the increase honours ministers’ commitment to the triple lock, which guarantees state pension payments rise each year by whichever is highest, inflation, average earnings growth, or 2.5 per cent. This year’s figure of 4.8 per cent was driven by average earnings data, surpassing both the 2.5 per cent floor and the Office for National Statistics’ reported consumer price index inflation figure of three per cent for February.
Two Rates, Two Outcomes
The size of an individual’s annual increase depends on when they reached state pension age. Those who qualified on or after 6 April 2016 receive the new state pension, which rises from £230.25 to £241.30 per week, bringing the annual total from £11,973 to £12,547, a gain of £574. Pensioners who reached state pension age before that date receive the basic state pension, which increases from £176.45 to £184.90 weekly, or from £9,175 to £9,614 annually, an uplift of £439.
Work and Pensions Secretary Pat McFadden said the increase was designed to shield pensioners from mounting economic pressures. “I know global shocks, and the effects they have on our living costs, will be increasing anxiety for many households,” he said. “This Government will always protect our pensioners, and that’s why we are raising the full rate of the new state pension by up to £575 this coming year.”
Pension Credit recipients will also benefit from the uprating, with the standard minimum guarantee rising by 4.8 per cent to £238 per week for single pensioners and £363.25 for couples. Older state pensioners receiving only the basic pension may therefore find Pension Credit brings their weekly income close to, or in some cases only marginally below, the new state pension figure.
Tax Threshold Concerns
The increase has renewed concerns about the proximity of state pension income to the personal allowance threshold. The new state pension now stands at £12,547 annually, just £23 short of the £12,570 income tax threshold.
Kate Smith, head of pensions at Aegon, warned that even a minimum 2.5 per cent rise next year would push the new state pension to £12,861, generating a tax liability of approximately £58. “While many pensioners already pay income tax because of money from other sources, including private pensions, there has been concern regarding the impact of this on vulnerable pensioners, particularly those who rely solely on the state pension,” she said.
Chancellor Rachel Reeves has pledged that no pensioner receiving only the state pension will pay income tax on it during this parliament, though the government has yet to set out how the policy will be administered in practice. Smith called for clarity on long-term plans, noting the current approach raises questions of fairness for those with modest private pension income alongside their state entitlement.
