The state pension is set for a 4.7 per cent boost in 2026, although industry experts have warned that the upcoming increase could not only cause further concern over the future of the state pension triple lock, but also see a growing number of pensioners paying tax.

Wage growth figures from the Office for National Statistics (ONS) suggested that the state pension is likely to increase by around 4.7 per cent in April 2026, taking the new state pension to £12,534 per year.

This would mean that the full new state pension would rise from its current level of £230.25 per week to £241.05 per week from April, while those retiring on the basic state pension would see their weekly income increase from £176.45 per week to £184.75.

LCP partner, Steve Webb, pointed out that an increase of 4.7 per cent in the headline rate of the pension would actually be slightly more than the 4.6 per cent assumed by the OBR in its March 2025 ‘Economic and Fiscal Outlook’ which fed into its assessment of the state of the public finances at the time.

And the growing cost of the state pension is set to cause challenges for the government, as  Hargreaves Lansdown head of retirement analysis, Helen Morrissey, pointed out that the
increase will also add further pressure as the government is "battling an already burgeoning state pension bill".

"The government has committed to keeping the triple lock in place for the rest of this parliament but longer term its future could be uncertain," she continued.  

"With a review into state pension age also ongoing other options could include an extension of the current timetable with dates for state pension age running into the late 60s and beyond.

"However, consideration also needs to be given to the issue of healthy life expectancy and the reality that while we may be living longer this does not necessarily mean that everyone can continue to keep working. The state pension forms the backbone of people’s retirement income, and many people simply cannot afford to retire without it.”
 
Morrisey pointed out that the change will also cause some degree of complexity for pensioners, as although those on the new state pension will receive the uplift, those on the basic state pension will only receive it on their main state pension.

Perhaps more concerningly, however, Webb pointed out that the new state pension figure is less than a pound a week short of the income tax threshold of £12,570.  

With the triple lock formula guaranteeing an increase of at least 2.5 per cent the following year, Webb warned that the headline rate of the new state pension is certain to exceed the current tax threshold by 2027.

“The standard rate of the new state pension is creeping ever closer to the frozen personal tax allowance," Webb stated.

"Indeed, we know for certain that someone who has no other income aside from the new state pension will be a taxpayer come April 2027.  It is already the case that nearly three quarters of all pensioners pay income tax, and the ongoing freeze in tax thresholds coupled with steady rises in the pension will drag more and more into the tax net”.

Similar concerns were raised by AJ Bell head of public policy, Rachel Vahey, who said this "poses a significant conundrum for Rachel Reeves and the Treasury".

“Removing the freeze on the personal allowance would come at significant cost to the Treasury at a time when the chancellor’s fiscal headroom is already strained at best, while an overhaul of the triple lock would come with huge political risk before the next general election," she stated.

"Needless to say, it’s a headache Starmer and Reeves could do without ahead of a crucial Budget in November and economic and political pressure already beginning to swell both within the Labour Party and outside of it.”

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