State Pension rates will be given a 3.9% boost.
State Pension rates will rise by 3.9% in the 2027 to 2028 tax year (Image: Getty)
State pensioners across the UK are being given boosted payments of up to £250.70 per week from next April under Andy Burnham’s government, it has been confirmed.
The State Pension rises at the start of every new tax year on April 6 with the increase determined in line with the triple lock, a UK Government guarantee that rates will go up every April by whichever is the highest out of three key measures. These are the consumer price index (CPI) measure of inflation (measured for September of the previous year), average wage growth between May and July of the previous year, or a minimum of 2.5%. Prime Minister Andy Burnham has already announced plans to scrap the triple lock in 2030 in favour of a ‘double lock’ system, but the current method of calculating State Pension rises remains in place until then.
New Budget documents released today have confirmed that the Chancellor is going to stand by the triple lock for the rest of this Parliament, despite plans to axe it from 2030. The triple lock is the mechanism which uprates state pension payments annually by one of three metrics (inflation, wage growth, or a flat 2.5%, whichever is highest).
The document says: “In line with the government’s commitment to the Triple Lock throughout this Parliament, the State Pension will continue to rise by the highest of 2.5%, inflation or earnings growth each year through to April 2029.
“This is set to see the annual rate of the full new State Pension increase by more than £2,000 over the course of the Parliament, taking the State Pension to a record high relative to earnings.
“The government is committed to delivering a sustainable State Pension system that people can trust will rise every year and be available for current and future pensioners. That is why the government is making those gains permanent by adjusting the Triple Lock from April 2030 so that the State Pension rises each year by the highest of 2.5%, inflation, or the amount required to maintain its value relative to earnings as reached in April 2029.”
Average wage growth has been confirmed as the highest of the triple lock figures at 3.9%, beating inflation at 3.5% and the minimum floor increase of 2.5%, so both the new and basic State Pension will go up by this amount from next April.
The upflift means the full new State Pension will go up from its current rate of £241.30 per week to a boosted £250.70 per week – a weekly increase of £9.40.
Over a full year this amounts to a maximum of £13,036.40 in State Pension payments, giving pensioners eligible for the full amount an annual boost of £488.80.
This uplift will apply to new state pensioners who reached State Pension age from April 6, 2016, when the qualifying age was set at 63 to 65. This later continued to rise to age 66, meaning new state pensioners will now all be aged under 77.
As for older pensioners who get the old basic State Pension, a 3.9% increase will take rates to £192.10 per week, up from £184.90 currently – a weekly boost of £7.20.
Over a full year, older pensioners entitled to the full amount would get a maximum of £9,989.20 in State Pension payments, providing an annual boost of £374.40.
Of course, these figures are based on the maximum possible amount for those with a full qualifying National Insurance record, so those without enough qualifying years will receive less.
As the personal tax allowance has been frozen at £12,570 since 2021, the 3.9% will see some state pensioners be caught within the tax net for the first time. The Government has already said pensioners who are wholly dependent on the new State Pension – with no private pension – or the old basic State Pension, “with no increments”, will not have to pay tax, even if they exceed the threshold.
While Mr Burnham has pledged to honour the Labour manifesto promise to keep the triple lock unchanged throughout this Parliament, this will be adjusted from April 2030.
From this point, he has proposed that the State Pension will continue to rise every year at least by prices or 2.5% – removing the link to average earnings—with the savings generated from this change to be used to “build up our National Care Service”.
The Prime Minister said the State Pension “will hold its value relative to earnings over time so that pensioners will always share in the rising prosperity of the nation”.
Adjusting the triple lock is estimated to reduce State Pension spending by £15 billion a year by the end of the 2030s, rising to £50 billion a year by 2050.
Confirming the plans last month, 10 Downing Street said: “The current triple lock will be maintained throughout this Parliament, increasing the State Pension by over £2,000. From April 2030, the adjusted triple lock will mean the State Pension continues to rise by 2.5% or inflation – whichever is higher – and by even more if that is required to maintain its value relative to earnings.
“This will ensure the living standards of pensioners keep up with the rest of the population. For example, if the value of the State Pension is around a third of average earnings by 2030/31, as average earnings rise, the State Pension will rise in line with that too.
“This adjusted triple lock will mean that if inflation spikes, pensioners will be protected. If wages rise, pensioners will share in that, with the State Pension tracking earnings over time. Nobody’s pension will ever go down. And State Pensions will be put on a sustainable footing for decades to come. The Government will legislate for the change during this Parliament.”