State Pension Set for 4.7% Boost Next April
Good news for pensioners! The State Pension is on course for a hefty 4.7% hike next April, thanks to the government’s triple lock guarantee. This means pensions will rise by whichever is highest: wage growth, inflation, or a 2.5% minimum. And right now, wage growth is pulling ahead.
Wage Growth Outpaces Inflation
New data from the Office for National Statistics shows total wage growth, including bonuses, hit 4.7% for the quarter ending in July—up from 4.6% the previous quarter. Inflation sits at 3.8% and is expected to stay below wage growth, making wage increase the likely driver of the pension rise.
September’s inflation figures, due in October, will nail down the final percentage.
Pensioners Warned Over Tax Trap
The pension rise will push the weekly full new State Pension close to the HMRC personal allowance limit. That means many pensioners could face income tax on their pension for the first time—unless tax rules change.
“The standard rate of the new state pension is creeping ever closer to the frozen personal tax allowance,” warns former pensions minister Steve Webb. “Someone relying solely on the new state pension will be a taxpayer by April 2027.”
“Nearly three quarters of pensioners already pay income tax, and rising pensions combined with frozen tax thresholds will drag more into the tax net.”
How Much More Will Pensioners Get?
While the exact rise is still subject to minor revisions, analysts at Hargreaves Lansdown estimate a 4.7% increase would push the full new State Pension from £230.25 to £241.05 per week from April.
Basic State Pension recipients would see their weekly payments rise from £176.45 to £184.75.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “The 4.7% uplift takes the annual state pension to around £12,535 – just under the basic rate tax threshold. That’s a worrying spot for many pensioners.”
“This rise will also pile more pressure on the Government’s already swollen state pension bill.”
The Government insists the triple lock will stay in place for this Parliament. But with a state pension age review underway, raising the pension age further into the late 60s could be on the horizon.
