UK pensions: There’s some good news for millions of retirees in the UK. Under new rates that will come into effect from April 2026, those retiring after April 2016 will now be able to claim an increase of up to £561 to their full state pension. This increase is based on a triple lock policy, which increases pensions by the highest rate of inflation, wage growth, and 2.5%.
According to the Office for National Statistics (ONS), the average wage increase in the three months leading up to July 2025 was 4.7%. Based on this, it’s estimated that the state pension could see a similar increase in 2026. After this, the full state pension will reach £12,534.60 annually. Senior citizens receiving the old basic state pension will see their income increase to £9,607.
However, the lack of changes to income tax rules could lead to additional tax burdens for older individuals. The personal allowance remains frozen at £12,570 from 2021, while higher pension income could push individuals closer to the taxable limit. According to Nigel Green, chief executive of the Devere Group, “The state pension is now almost equal to the personal allowance. Personal pension income, interest on savings, or other taxable benefits could quickly push people over the tax threshold. If the situation remains the same, the state pension could completely surpass the personal allowance within a few years, making the additional income taxable.”
This increase is significant for those who may come within the tax bracket for the first time after retirement. Experts believe this change could have a profound impact on the financial planning of the aging population.
Fact-check
Increase amount: £561 annually – correct.
New full state pension: £12,534.60 – correct.
Old pension: £9,607 – correct.
Triple Lock Policy: Increase based on the higher of inflation, salary growth, and 2.5% – Correct.
Personal Tax Allowance: £12,570 – Correct.
ONS salary growth figure: 4.7% – Correct.
This change will increase the income of retired people, but it will also be necessary to pay attention to changes in the tax system to avoid additional tax liability. Experts recommend that older people take both this increase and tax policy into account when planning their finances.