Eligible pensioners are on course for almost £500 extra per year.
The full new State Pension will be worth £250.70 per week from April 2027 (Image: Getty)
New state pensioners aged 77 and under across the UK are set to receive an annual payment boost of up to £490 from the Department for Work and Pensions (DWP) from April, it has confirmed.
The extra cash comes from a 3.9% uplift to State Pension rates which will take effect in the 2027 to 2028 tax year in line with the triple lock. This is a UK Government guarantee that the State Pension will rise every April by whichever is the highest out of three key measures: the consumer price index (CPI) measure of inflation (measured for September the year before), average wage growth between May and July the previous year, or 2.5%.
As average wage growth was the highest of the three measures this year at 3.9%, sitting above inflation at 3.5% and the 2.5% minimum floor increase, both the new and basic State Pension will go up by this amount in the coming tax year.
The DWP has now confirmed that, from April, the full new State Pension will be worth £250.70 per week (up from £241.30 currently). This amounts to around £490 extra per year if you’re eligible for the maximum amount.
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This payment boost 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, which is given to men born before April 6, 1951, and women born before April 6, 1953, a 3.9% increase will take rates to £192.10 per week from April (up from £184.90 currently). This amounts to an annual boost of around £375 for those eligible for the full amount.
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 in the 2027 to 2028 tax year.
Confirming the new rates, Baroness Sherlock, Minister of State, said: “I am pleased to announce that the basic and full rate of the new State Pensions will be increased by 3.9%, in line with the increase in average weekly earnings in the year to May-July 2026.
“This delivers on our Triple Lock commitment throughout this Parliament to increase these rates in line with the highest of growth in prices, growth in earnings or 2.5%. From April, the full annual rate of the new State Pension will increase by around £490. The full annual rate of the basic State Pension will increase by around £375.”
The Government has also confirmed that from April 2027, people above State Pension age, or reaching State Pension age within the tax year, who have a total income up to and including the value of the new State Pension will not have to pay income tax thanks to the introduction of a new Pension Tax Allowance. The Personal Tax Allowance is still frozen at £12,570 but a 3.9% boost to State Pension rates from April will see the annual new State Pension go above this at £13,036.40.
But it was announced in October’s Budget that pensioners with incomes at or under the value of the full new State Pension will not be brought into paying tax because of State Pension uprating in this Parliament. This will apply regardless of where your income comes from, meaning those with income from work or self-employment, a private pension, the State Pension, savings, property or dividend income, will be protected.
Meanwhile, pensioners with a total income between £13,037 and £13,319 will receive some Pension Tax Allowance and pay less income tax than they otherwise would. This will be done through a tapered system where for every £3 of income above the full level of the new State Pension, your Pension Tax Allowance will reduce by £1. As for pensioners with a total income of £13,310 or more, they will not be eligible for any Pension Tax Allowance.
The new Pension Tax Allowance will apply from April 6, 2027, until April 5, 2030, and will be uprated in line with the full new State Pension across this Parliament.
The Government said in the 2027 to 2028 tax year, around 500,000 pensioners are set to benefit, with around 290,000 paying no tax at all, with the remainder receiving a tapered allowance.
HM Treasury said: “If your total income is slightly higher than the full annual value of the new State Pension, you may still receive an income tax reduction and pay less income tax than you otherwise would.
“The value of your Pension Tax Allowance will gradually reduce as your income increases until it is fully withdrawn. For every £3 of income above the full level of the new State Pension, your Pension Tax Allowance will reduce by £1.
“You will not need to contact HMRC or make a claim for the Pension Tax Allowance. HMRC will use information it holds on your State Pension age and income to apply the Pension Tax Allowance automatically when calculating your income tax.”