Pensioners to pay “retirement tax” within three years, according to state pension forecasts

The state pension is set to reach £12,592 by 2027, meaning it will exceed the tax-free personal allowance. We look at the latest forecasts, and how frozen tax thresholds affect retirees

Older couple at home looking at laptop
(Image credit: Getty Images)

Retirees will have to start paying income tax on their state pension in less than three years, according to official forecasts.

The full new state pension will reach £12,592 a year (£242 a week) in April 2027, meaning it will breach the £12,570 tax-free personal allowance.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Ruth Emery
Contributing editor

Ruth is an award-winning financial journalist with more than 15 years' experience of working on national newspapers, websites and specialist magazines.

She is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. 

A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. 

Outside of work, she is a mum to two young children, while also serving as a magistrate and an NHS volunteer.