State Pension payments could rise by over £550 next year under the Triple Lock

The annual State Pension uprating in April could see nearly nine million older people pay tax in retirement.

People on the New State Pension could see payments rise by over £550 next year under the Triple Lock as earnings growth (4.6% including bonuses) outpaces the current rate of inflation (3.8%). New analysis from leading independent financial services consultancy Broadstone suggests the State Pension is set for another significant uplift for the 2026/27 financial year.

Under the Triple Lock, State Pensions increase each year in-line with whichever is the highest of average annual earnings growth from May to July, Consumer Price Index inflation rate (CPI) in the year to September or 2.5 per cent.

State Pension could rise to over £12,500 a year if earnings growth remains at its current level of 4.6 per cent. However, such a rise could see more pensioners pulled into paying income tax as the Personal Allowance will remain frozen at £12,570 until April 2028.

READ MORE: State Pension uprating will not be paid to nearly half a million older peopleREAD MORE: Millions of people over State Pension age set to pay tax in retirement this year

Financial experts at Broadstone say that with average earnings growth including bonuses currently running at 4.6 per cent – and just one month of data still to be published – increases are expected to outpace inflation. If this rate were maintained in September, the new State Pension would rise annually by £551, taking it to around £12,524 a year from £11,973.

However, if earnings growth falls dramatically in the next month, then the next determinant for an uprate will be the inflation figure.

If September’s inflation figure matches the Bank of England’s projection of 4 per cent, the State Pension would increase by around £480 from April 2026 – lifting it to £12,452 per year.

While the increase is unlikely to be enough to tip the full New State Pension over the personal tax allowance threshold, it is still likely to cause even more pensioners to be liable for income tax.

The latest data from HM Revenue and Customs (HMRC) shows 8.7 million people of State Pension age or older are projected to pay income tax on retirement income in 2025/26, a rise of around 420,000 compared to the previous year (2024/25) and a rise of 1.85m from ten years ago (2015/16).

Broadstone’s analysis follows the recent launch of the independent State Pension age review which will make recommendations for future arrangements in light of long-term demographic pressures and questions around the sustainability of the State Pension in its current form.

David Brooks, Head of Policy at Broadstone, said: “Another significant increase to the State Pension now looks inevitable given the strong growth in average earnings and rising inflation.

“The good news is this will provide further financial assistance to pensioners in light of ongoing cost of living pressures and the reliance of many retirees on the State Pension as their main source of income.

“The bad news is that the rising costs of the contributory benefit risks creating growing tension between today’s taxpayers who fund the system and current pensioners who rely on it. The Government and Pensions Commission will be under pressure to confront this challenge as part of the independent State Pension age review.”

He continued: “It seems inevitable that, while the State Pension will and should remain a bedrock of retirement provision, calls to introduce means-testing will grow louder. These should be resisted, but what remains on the table is the possibility of the cost being met by wealthier pensioners via the introduction of a National Insurance Contribution of some kind or a winding down of the Triple Lock.

“Ultimately, the cost of the State Pension is a political decision. The persistence of the Triple Lock has created a steady rise in costs without clear long-term policy direction. As the retired population grows and depends increasingly on today’s workers to fund the system, some form of change is unavoidable.”

State Pension uprating predictions for 2026/27

The Triple Lock is currently on track to be determined by the earnings growth element – currently at 5 per cent (excluding bonuses) and 4.6 per cent (including bonuses). However, this figure may go up or down and isn’t the final metric that will determine the level of uprating.

The earnings growth figure that will be included in the Triple Lock guarantee will be published by the ONS on September 16. The CPI figure that will be used is due to be published in mid-October.

The annual State Pension uprating won’t be confirmed until the Autumn Budget, but pensioners – and those due to retire next year – can start to plan their finances by following the Triple Lock measurements.

That being said, a 4.6 per cent increase on the current State Pension would see people receive the following amounts.

Full New State Pension

Weekly: £240.85 (from £230.25)Four-weekly pay period: £963.40Annual amount: £12,524

Full Basic State Pension

Weekly: £184.55 (from £176.45)Four-weekly pay period: £738.20Annual amount: £9,596

The annual uprating will be confirmed during the Autumn Budget.

State Pension and tax

Guidance on GOV.UK states: “You pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates.

Your total income could include:

the State Pension you get – Basic or New State PensionAdditional State Pensiona private pension (workplace or personal) – you can take some of this tax-freeearnings from employment or self-employmentany taxable benefits you getany other income, such as money from investments, property or savingsCheck if you have to pay tax on your pension

Before you can check, you will need to know:

if you have a State Pension or a private pensionhow much State Pension and private pension income you will get this tax year (April 6 to April 5)the amount of any other taxable income you’ll get this tax year (for example, from employment or state benefits)

You cannot use this tool if you get:

any foreign incomeMarriage AllowanceBlind Person’s Allowance

Use this online tool at GOV.UK to check if you have to pay tax on your pension.

The full guide to tax when you get a pension can be found on GOV.UK here.

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