Pensioners will likely get a 3.9% increase in their state pension next April.
Under the triple lock mechanism, the state pension rises each April by the highest of the previous September’s Consumer Prices Index (CPI) measure of inflation, 2.5% or average earnings growth from the previous May to July.
Provisional figures published by the Office for National Statistics (ONS) today (15 September) confirmed average earnings growth between May and July was 3.9%.
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Unless CPI inflation for September 2026 rises sharply from 2.9% in July, the 3.9% figure is likely to drive how much the state pension will go up by next April.
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The 3.9% uplift will probably be confirmed by the chancellor John Healey in next month’s Autumn Budget.
The latest wages figures for May to July are initial estimates and potentially subject to change when revised data is published in October. However, revisions of this sort are typically minor.
Rachel Vahey, head of public policy at investment platform AJ Bell, said: “Although we still need to see September’s inflation figure and any revisions to July’s earnings growth before we know for definite how much it will increase by in 2027, it’s looking very likely that the value of the full new state pension will surge past £13,000 – and the personal allowance – for the first time.
“Even using the lowest measure of 2.5% under the triple lock means the full state pension amount would exceed the personal allowance of £12,570.”
How much will the state pension rise by?
The full new state pension, paid to men born on or after 6 April 1951 and women born on or after 6 April 1953, is likely to increase from £241.30 per week (around £12,547 per year) to £250.70 per week (around £13,036 per year).
The basic state pension, paid to older pensioners, looks set to increase from £184.90 a week (around £9,614 per year) to £192.10 (around £9,989 per year).
Some people don’t benefit from the state pension triple lock and those on the old state pension won’t see all elements of their pension rise in line with the mechanism.
For example, additional amounts such as SERPS or state second pension are inflation-linked.
Will retirees have to pay tax on their state pension?
More pensioners face paying income tax from April 2027 due to the ongoing freeze to income tax bands and the state pension rising each year.
A recent Freedom of Information (FOI) request submitted by Steve Webb, former pensions minister and now consultant at LCP, revealed hundreds of thousands of pensioners are gradually being pulled into paying more tax due to frozen tax thresholds and rising incomes.
With the full new state pension set to breach the £12,570 personal allowance, even pensioners whose sole income is the state pension will be pulled into the basic rate tax band.
However, former chancellor Rachel Reeves said these pensioners are not expected to have to pay the “small amount” of tax on the state pension.
Torsten Bell, minister for pensions, said the chancellor will “set out further details on how that commitment will be delivered at the Budget”.
Analysis by LCP suggests, as the policy currently exists, one in 16 pensioners will benefit from the move.
How to protect yourself from income tax
There are ways pensioners facing a greater income tax bill from next April can lessen the blow.
James Norton, head of retirement and investments at investment firm Vanguard Europe, said: “For those with other sources of retirement income, given the personal allowance remains frozen at £12,570 and the higher rate tax threshold has stayed at £50,270, a considered approach to tax and retirement is needed to make sure you keep as much of your hard-earnt savings as possible.”
Only draw the pension income you need. Leaving surplus funds in your pot will allow it to grow while reducing your taxable income.
You can also make the most of tax-free accounts like ISAs, ensuring any investment gains or interest earned from savings are shielded from tax.
Couples can make the most of each other’s allowances to lower overall tax bills as well. For example, if you’ve used up your capital gains tax (CGT) allowance for the tax year, you could transfer assets to a partner who hasn’t used their full allowance to lower your combined CGT bill.
