The state pension is expected to increase by 4.7% in April next year, benefiting many elderly individuals. This rise is part of the annual adjustment based on the triple lock pledge, which ensures that the state pension rises by the highest of three factors: inflation (using the previous September rate), wage growth (average increase between May and July), or a minimum of 2.5%.
According to the Office for National Statistics, the average wage growth figure has been officially confirmed at 4.7%. With inflation projected to remain below this level for the remainder of the year, it is probable that the state pension will increase in line with wage growth. Currently, inflation stands at 3.8%.
Analysis from AJ Bell indicates that the full new state pension could rise from £230.25 per week (£11,973 annually) to £241.05 per week (£12,534.60 yearly) in April 2026, representing an increase of over £560 annually. Similarly, the old basic state pension may see an increase from £176.45 weekly (£9,175.40 annually) to £184.75 per week (£9,607 yearly), subject to individual National Insurance contribution records.
To qualify for the new state pension, individuals born on or after April 6, 1951 (men) or April 6, 1953 (women) generally need 35 years of National Insurance contributions. On the other hand, eligibility for the old basic state pension varies based on birthdate and gender, with differing qualifying year requirements.
The current state pension age is 66 for both men and women, set to incrementally rise to 67 between 2026 and 2028, followed by a further increase to 68 in the mid-2040s.
Rachel Vahey, AJ Bell’s head of public policy, highlighted that unless inflation surpasses 4.7% in September, the latest earnings data point towards an increase in the new state pension to £12,534.60 in April 2026. This would mark the first time the pension exceeds £12,000, potentially nearing the frozen personal allowance threshold.
The projected rise in the state pension poses a dilemma for policymakers, as it may exceed the personal allowance in April 2027, potentially prompting a decision on the allowance or the sustainability of the triple lock policy. Any adjustment to the personal allowance could strain the Treasury’s finances, while altering the triple lock carries significant political implications, particularly ahead of the upcoming Budget in November and amid growing economic and political pressures within and outside the Labour Party.