People receiving the state pension in the UK are expected to see an increase of more than £500 a year from April. The rise comes under the government’s “triple lock” policy. This policy boosts the pension each year by the highest of inflation, 2.5%, or average earnings growth.
Recent data from the Office for National Statistics (ONS) shows total pay including bonuses grew by 4.7% in the three months to July. Almost 13 million people currently receive the state pension. Projections suggest pensioners could start paying income tax on their pension from 2027. This would be the first time.
The flat-rate state pension for those reaching state pension age after April 2016 is expected to rise to £241.05 per week. This would total £12,534.60 a year, an increase of £561.60. This means £9,607 a year, up £431.60.
With inflation forecast to be around 4% in September, average earnings growth is likely to determine the increase for the third consecutive year.
Therefore, Sir Steve Webb, a former pensions minister, said the rise brings the state pension close to the frozen personal tax allowance of £12,570. He warned that someone relying solely on the state pension could become a taxpayer by April 2027. Many pensioners, like Linda from Wokingham, worry about the tax threshold. She stressed that raising the tax threshold would help retirees manage financially.
The ONS also reported that regular wage growth, excluding bonuses, fell to 4.8% in the three months to July. This is the lowest since May 2022. Public sector pay rose 5.6%, while private sector wages increased by 4.7%.
Economists predict wage growth will continue to slow over the coming year due to weaker economic activity and higher labor costs. Despite this, earnings growth remains strong by historical standards.
The triple lock, introduced in 2011, guarantees that the state pension keeps pace with living costs and workers’ earnings. The government has pledged to maintain it for the duration of this parliament.
The latest data also show the UK unemployment rate at 4.7% for the three months to July. Job vacancies fell by 10,000 in the quarter to August, while payrolled workers declined by 8,000 last month. The labour market continues to cool, though the rate of decline appears to be slowing.
For more political updates, visit London Pulse News.
