The upcoming increase in the state pension is projected to be 4.7% in April, benefiting numerous elderly individuals. This increase is in accordance with the triple lock promise, which ensures that the state pension rises by the highest value among inflation (based on the previous September figure), wage growth (average increase between May and July), or 2.5%.
Recent data from the Office for National Statistics confirms that average wage growth stands at 4.7%. With inflation expected to remain below this level for the remainder of the year, it is likely that the state pension will be adjusted in line with wage growth. Current inflation stands at 3.8%.
Analysts at AJ Bell have calculated that the full new state pension is set to rise from £230.25 per week (£11,973 annually) to £241.05 per week (£12,534.60 annually) by April 2026. This translates to a yearly increase exceeding £560.
For the basic state pension, the increase is expected to raise the weekly amount from £176.45 (£9,175.40 annually) to £184.75 (£9,607 annually). These figures represent the full state pension amounts, with individual payouts potentially lower based on their National Insurance contributions.
The eligibility for the new state pension varies by birthdate, with men born on or after April 6, 1951, and women born on or after April 6, 1953, qualifying. Generally, individuals need 35 qualifying years of National Insurance contributions for the full new state pension.
The old basic state pension is claimable by men born before April 6, 1951, and women born before April 6, 1953, with the required qualifying years depending on birthdate and gender. For instance, men born before April 6, 1945, need 44 years of contributions, while those born between 1945 and 1951 need 30 years.
Currently, the state pension age stands at 66 for both genders but is set to increase gradually to 67 between 2026 and 2028, followed by another rise to 68 in the mid-2040s.
Rachel Vahey, AJ Bell’s head of public policy, noted that if inflation remains below 4.7% in September, the state pension could rise to £12,534.60 in April 2026, crossing the £12,000 threshold for the first time and nearing the frozen personal allowance.
The potential increase in the state pension above the personal allowance could pose challenges for policymakers and the government, especially in balancing fiscal responsibilities and political implications leading up to future elections.