We all look forward to the day we can retire and finally spend some quality time with family and friends. However, with the current cost of living in the UK, some people may think twice before they decide to officially retire. Now that the State Pension is changing next year, the new “Triple lock” guarantee that will hit pensioners may even delay retirement in the long run. Find out today how this new triple lock could affect you in the near future.

State Pension matters for this reason

Living in the UK is grand, but it also costs a pretty penny. The cost of living in the UK is high in general, with certain expenses significantly higher than the global average and many other countries. According to the Office for National Statistics, the following factors play a key role in the high cost of living:

Inflation
Fuel and energy costs increased sharply, especially in 2022 and have remained high since then
Food and other consumer goods increased in price

While the inflation rate has significantly slowed down in the UK, the cost of living will remain high as a result of cumulative price increases over the past few years. That is why the State Pension is so vital in the UK. According to MoneySavingExpert, 65% of the British population receives basic State Pension, which is 8.4 million people. Another 36% receive the new State Pension, which 4.7 million people.

Now, the nearly 13 million pensioners can expect a “triple lock” guarantee next year, but its impact could be less beneficial in the following years.

A “Triple lock” guarantee hits pensioners next year

According to MoneySavingExpert, as a guaranteed result of the triple lock, the State Pension usually increases every April by the highest of the following:

Average wage growth between May and July (including bonuses), or
September’s Consumer Prices Index (CPI) inflation measure, or
By 2.5%

The Office for National Statistics (ONS) announced that the total pay, including bonuses, for the three months up to July was 4.7%, which is why the State Pension will most likely increase by 4.7% in April 2026. According to a report by the BBC, this means that the full State Pension could be:

£241.05 per week for New State Pensioners

Thus £12,534.60 annually, which is a rise of £561.60

£184.75 per week for Old State Pensioners

Thus £9,607 annually, which is a rise of £431.60

It could have these implications in the near future

According to the former pensions minister and partner at pension consultants LCP, Sir Steve Webb, the typical rate of the new state pension is:

“creeping ever closer to the frozen personal tax allowance. It is already the case that nearly three quarters of all pensioners pay income tax, and the ongoing freeze in tax thresholds coupled with steady rises in the pension will drag more and more into the tax net.”

The current personal tax allowance is £12,570, and predictions indicate it will remain as such until 2028. This means the New State Pension for 2026 will only be £35 less than the personal tax allowance. These figures have financial experts worried that the almost 13 million pensioners will have to pay income tax on their pension from 2027 for the first time.

As the saying goes, getting older is not for sissies. While getting older is a privilege and not a right, the journey remains challenging. That is why it is vital to stay up to date with the latest government announcements and changes, especially when they will impact your pension, as it could make or break you in old age. To stay up to date with the latest announcements regarding the State Pension, please view the official statement from the UK Government.

Disclaimer: Our coverage of one-off payments, support payments, tax reliefs, tax refunds, tax credits and other payments is based on the official sources listed in the article. All payment amounts and dates, as well as eligibility requirements, are subject to change by the governing institutions. Always consult the official source we provide to stay up to date and obtain information for your decision-making.