State pensioners are in line for up to £514 extra per year as things currently stand.
The DWP is set to hand out another £514 a year (Image: Getty)
New state pensioners are in line for a huge boost to their annual benefit income – but will avoid a tax bill from HMRC for at least one more year thanks to Andy Burnham’s two rules.
New state pensioners are in line for a boost to their state pension worth approximately £514.45 a year. That’s because the Triple Lock forecasts show that right now, the benefit is set to increase by 4.1% next year.
The new state pension was introduced in 2016 and applies to all men born after April 5, 1951 and women born after April 5, 1953. Everyone who gets the full new State Pension could be handed another £514 a year thanks to the Triple Lock, according to the latest figures.
The DWP has to increase the amount paid to those who receive the state pension each year due to the ‘Triple Lock’ system, which enshrines in law that everyone who is eligible for the handout from the Department of Work and Pensions must see an increase each year, either level with inflation, wage growth or by 2.5%, whichever is highest. New Prime Minister Andy Burnham has already committed to the triple lock for the upcoming Budget this October, which was a Labour manifesto promise.
Consumer Price Index figures for April to June 2026 dictate that it would be a handy 4.1% increase for pensioners per year. However, these are not the final figures, which will be used to calculate the triple lock wage growth element, which is taken from the May to July figures, set to be released in September.
But if the figures were to remain the same, it would lead to a £514.45 per year boost for a new state pensioner with a full National Insurance record. If wage growth drops in the following three-month period, the calculation would reduce, but if it increases, the triple lock rises yet higher.
The absolute minimum rise possible is £313.69, as this is the minimum floor 2.5% for an increase.
Right now, the full new post-2016 state pension is set at £12,547.60 per year, so a 4.1% increase would add £514.45 per year to pensions, taking the weekly payments from their current £241.30 per week to about £251.20 per week.
For older state pensioners, the increase would be the same 4.1% rise, but on a smaller starting amount, as the older state pension pays a smaller total, currently £184.90 per week. However, older state pensioners can also get now-defunct schemes such as the Second State Pension or SERPs, which younger state pensioners can’t access.
Someone on a full basic state pension would see their weekly amount rise from £184.90 per week to around £192.50 from next April.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “Average wage growth plus bonuses stood at 4.1 per cent between April-June. This could prove to be an interesting figure for state pensioners as next month’s data is a key part of the formula for the state pension triple lock.”
She added: “Should next month’s figure remain the same as today’s, this would put someone on a full new state pension on around £251.20 per week, up from £241.30 per week. Someone on a full basic state pension would see their weekly amount rise from £184.90 per week to around £192.50 from next April.”
Ms Morrisey stressed, though, that even these amounts will not be enough in retirement, and to boost your workplace pension.
She continued: “While an inflation-busting increase will be good news for pensioners, the fact remains that the state pension on its own does little more than cover the essentials. If you want more from your retirement, then you need to make the most of your workplace and personal pensions.
“Auto-enrolment has done a great job in recent years in getting more people saving into a pension. However, for many, saving at auto-enrolment minimums will not enable them to maintain their lifestyle in retirement. To prevent a nasty shock, it pays to consider what you want your retirement to look like and then you can calculate how much it might cost. A nice retirement means different things for different people – some may want to travel the world; others may want to stick closer to home but spend more time with family and friends.
“Make use of online tools from your pension provider, such as online calculators. These can tell you how much you are on track to receive. If you aren’t quite where you want to be, you can also model the impact of increasing your contributions over time. Taking small steps, such as increasing your contributions every time you receive a pay rise, can make a huge difference. You can also make the most of employer contributions. Many businesses contribute at auto-enrolment minimum levels, but others contribute more if you do – the so-called ‘employer match’. If you’ve got the extra cash, then the extra boost from your employer can make all the difference to your lifestyle in retirement.”