State Pensions are due to rise by 4.7% from next April under the triple-lock in line with annual earnings growth , as announced today by the Office for National Statistics (ONS). This will mean the basic rate of State Pension (pre-2016) will rise by £431.60 to £9,607 (£184.75 per week), from 6 April 2026. The new State Pension (from April 2016) will rise by £561.60 to £12,534.60 per year (£241 per week), which is just £36 below the frozen income tax threshold of £12,570!
The Government is committed to the triple-lock for the lifetime of this Parliament, whereby the new and basic rate of State Pension rise by the greater of CPI inflation; average earnings growth; or 2.5%. The 4.7% annual increase in average earnings including bonuses announced today is higher than the current CPI inflation rate of 3.8%, which is expected to rise to 4% for September due to be confirmed by ONS on 15 October. Civil Service pensions are linked to that September CPI increase.
The continuation of the freeze of income tax thresholds will mean more of the State Pension increase will be taken in income tax as more pensioners come into the tax threshold of £12,570, which has been frozen since April 2021, and not due to increase until at least April 2028. Had the threshold risen in line with CPI inflation it would now be £15,518, well above the highest rate of State Pension.
CSPA General Secretary Sally Tsoukaris commented: “The 4.7% is welcome news thanks to the continuation of the triple-lock, which is vital to ensure that State Pensions keep pace with wage growth as well as inflation so that pensioners income does not suffer the decline relative to wages that occurred prior to its introduction in 2011.”
“Many pensioners are struggling in retirement and yet are being dragged into the 20% tax bracket on relatively low incomes. Three-quarters of all pensioners are now paying income tax after a lifetime of working, and millions more are now paying tax. CSPA and our partners in Later Life Ambitions are preparing a `Budget for Later Life` to be launched in October, and that includes raising the basic personal tax thresholds; and retaining the State Pension triple-lock.”
