The UK’s state pension is on course for an inflation-beating £500 annual increase next April, meaning the rise will drag fully dependent pensioners over the tax-free personal allowance for the first time.
According to the latest Office for National Statistics (ONS) data, average earnings total pay grew by 4.1% between April to June 2025 and April to June 2026.
Under the government’s triple lock commitment, the state pension rises each year by the highest of average earnings growth, Consumer Prices Index inflation, or 2.5%. With CPI inflation sitting at just 2.6% in the year to June, wage growth is widely expected to be the determining metric for the April 2027 uplift.
The critical earnings figure used to calculate the triple lock is the May-July data, which will be published next month. However, if wage growth holds steady at 4.1%, the full New State Pension will jump by £9.90 a week from £241.30 to £251.20.
This represents an annual increase of slightly over £500, pushing the total yearly payout to around £13,062, which is above the tax-free personal allowance, which remains frozen at £12,570.
The government previously pledged that a narrowly defined cohort of pensioners – specifically those wholly dependent on the New State Pension or the old basic pension, with no private provision – would be shielded from paying income tax.
Steve Webb, partner at pension consultants LCP, warned that the sector urgently needs clarity on how the government intends to manage the threshold breach.
“Under the triple lock formula, the new state pension will rise next April by the highest of the growth in wages, prices or 2.5%,” Webb said.
“Based on today’s figures, it is highly likely that it will be average earnings growth which comes out on top.
“Unless things change sharply in the next month, those on the new state pension can expect to see an increase of around £500 per year next April. But the sting in the tail is that this will take the standard rate of the new state pension above the tax threshold.
“We therefore urgently need to know how the government plans to fulfil its pledge to make sure that those wholly dependent on the new state pension will not be charged income tax next year.”
