Two pensioners calculating finances
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The state pension is expected to rise by nearly £500 a year from next spring, after official figures showed that wages grew on average by 3.9% between July and September 2026.
The pension triple lock is a government guarantee that says the state pension will increase by average wage growth, inflation, or 2.5% - whichever figure is the highest.
In the unlikely event that the next UK inflation figure, revealed in October 2026, is higher than 3.9%, the full, new state pension, introduced in 2016, will be worth around £13,030 a year from April 2027. This is equivalent to £250.70 a week, up from the current figure of £241.30.
Recipients of the previous basic state pension will receive £192.10 a week, up from £184.90.
Pensioners in this category would also receive an inflation-linked increase on any ‘additional’ state pension they receive – such as SERPS (the State Earnings-Related Pension Scheme) or the State Second Pension.
John Healey, the Chancellor of the Exchequer, is likely to confirm the new state pension figure in the Budget on 28 October.
The anticipated rise in its value would mark an important milestone as it would be the first time the benefit’s annual amount exceeded the income tax personal allowance which currently stands at £12,570.
Technically, this would make pensioners liable for income tax even if they only received the new state pension in full. But there are plans to head off this scenario.
Jenny Holt, customer savings and investment director at Standard Life, said: “The government has said it intends to ensure that people whose sole income is the basic or new state pension do not have to pay small amounts of tax as a result, with a new approach due from the tax year 2027/28.”
But former pensions minister Steve Webb, now a partner at consultancy LCP, has described the government’s plans to address this point as “a mess”.
He added: “[The plans] are only likely to benefit a small fraction of pensioners… and will only create unfairness between different groups of pensioners, and between pensioners and low-paid workers, who do not qualify for any exemption.”
Well over a third (41%) of people are unsure if their savings will last throughout retirement, with rising living costs and fears of not having saved enough among their main concerns.
The finding comes from trading platform interactive investor’s Great British Retirement survey of 8,000 people that provides a bird’s-eye view of the UK’s current retirement landscape.
ii also reported that one in five people (19%) over the age of 66 continue to work. This compared with a figure of 12% three years ago. Almost half of retirees (48%) told ii that they rely on the state pension as their main source of income.
The ii analysis coincides with research from HMRC that shows 45 to 54-year-olds are the least likely to have checked their state pension out of any age group, despite this period being an important time for retirement planning.
To counter this, the UK’s tax authority is urging individuals to download the HMRC app and visit the ‘Tax confident’ website to help them get ready for retirement and understand what to expect.
In other pensions news, the majority of people approaching retirement (91%) say that simplifying their finances is a priority, according to research from Standard Life
The company also found that more than half of those aged between 55 and 70 with a defined contribution pension – a workplace arrangement or personal pension policy, for example – saw retirement as the chance to re-set their finances.
Four-in-five (81%) of the 2,000 respondents said paying off debts was important before retiring. Among mortgage holders, three-quarters (73%) said they were worried about continuing with a home loan in retirement.
Catherine Foot, director of the Standard Life Centre for the Future of Retirement, said: “The decision of whether to use your pension to pay off debts is a complex one and the right course of action will depend on the individual.
“For those with high interest unsecured debts, using savings to clear debt could make sense. Decisions around mortgages can be more complex.”
The average person over the age of 50 holds loyalty and similar rewards initiatives worth well over £100, but the large majority are unaware that some of these holdings may be transferable to a family member or next of kin after death.
Research from comparison site Compare The Market found that, on average, the over-50s hold loyalty, rewards, gift card, and cashback balances worth £119.
Despite so-called ‘digital assets’ becoming a regular part of our lives, the company said that items such as air miles remained a forgotten part of estate planning despite holding a real value.
The research showed that supermarket loyalty schemes are the clear favourite among the over-50s, with more than eight in ten people (83%) belonging to at least one. But one in five over-50s (23%) admitted their family or a trusted person would not be aware of them belonging to a reward, gift card, or cashback scheme.
Of those whose family did know about scheme membership, less than half (43%) said loved ones would know how to access or claim rewards should the need arise
Compare The Market’s Emily Barnett said: “A digital legacy should be treated with the same care as physical possessions. These accounts may seem insignificant individually, but collectively they can represent a meaningful amount of money.”
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