Millions of UK pensioners could receive nearly £500 more a year from April 2027, as a planned State Pension increase pushes the full annual payment above £13,000 for the first time and raises fresh questions about income tax.
Why State Pension Payments Could Rise by £488
According to Express.co.uk, the State Pension is on course to increase by 3.9% from April 6, 2027, under the government’s triple lock guarantee.
The policy ensures payments rise each April by whichever is highest: September’s Consumer Price Index (CPI) inflation rate, average earnings growth measured between May and July, or 2.5%.
Figures published by the Office for National Statistics (ONS) show September inflation reached 3.5%, up from 3.1% in August. Average wage growth stood at 3.9%, making earnings the measure expected to determine the next increase.
For people receiving the full new State Pension, weekly payments would rise from £241.30 to £250.70. That would bring annual payments to £13,036.40, an increase of £488.80.
The full increase applies to pensioners entitled to the maximum payment. Those with incomplete National Insurance records may receive less.
Older Pensioners Will See a Smaller Increase
The new State Pension generally applies to men born on or after April 6, 1951, and women born on or after April 6, 1953, who reached State Pension age from April 2016.
People receiving the older basic State Pension would also benefit from the 3.9% increase, although their maximum payments remain lower.
The full basic pension would increase from £184.90 to £192.10 per week, producing an annual total of £9,989.20. That represents an additional £374.40 over 52 weeks.
Individual entitlements can vary depending on National Insurance contributions, additional pension components and personal circumstances.
The £12,570 Tax Threshold Creates a New Problem
The proposed increase would push the full new State Pension above the £12,570 personal income tax allowance, which has remained frozen since 2021.
Rachel Vahey, head of public policy at AJ Bell, said:
“Pensioners are set to receive just shy of £500 extra in their State Pension next year. The full new State Pension is set to surge past £13,000 for the first time, leaving the frozen £12,570 personal allowance trailing in its wake.
“The Government has promised that those living solely on a State Pension above the allowance will not pay income tax on it – but the crucial detail on how that will work is still missing. Pensioners are now looking to next week’s Budget to fill in the blanks.”
The government has pledged to protect pensioners whose only income comes from the State Pension, but the mechanism remains unclear.
Further details are expected in the October 28 Budget.
Government Plans to Change the Triple Lock After 2030
Prime Minister Andy Burnham has proposed replacing the existing triple lock from 2030 while maintaining its current protections throughout this Parliament.
The revised system would retain protection against inflation and include an earnings-related safeguard designed to prevent the State Pension from falling below its established share of average wages.
A Government spokesperson said:
“We are committed to the triple lock for the rest of this Parliament, and the adjusted triple lock will build on the gains the policy has made for pensioners in raising the State Pension.
“This means the State Pension will always increase by at least the highest of 2.5%, CPI inflation or a new earnings link, so that the State Pension will never fall below its record high level when we adjust the current triple lock.”
The government plans to direct savings from the proposed changes toward developing a National Care Service.
