The full new State Pension is on course to rise above £13,000 a year from April 2027. If the rise follows the latest earnings figure of 3.9%, the weekly rate goes from £241.30 to about £250.70, according to BBC News, worth about £13,036 a year. The increase is not final yet.
Where the 3.9% comes from
The State Pension rises each April under the triple lock, by whichever is highest of three measures: average earnings growth, CPI inflation in September, or 2.5%. The earnings figure that counts is total pay growth, bonuses included, over May to July. Official figures published in mid-September put that at 3.9%, the BBC reports, which for now is the highest of the three.
The current rate is set out on GOV.UK: £241.30 a week for someone on the full new State Pension, or £12,547.60 a year. A 3.9% rise adds about £488 a year. For people on the older basic State Pension, the equivalent move is from £184.90 to about £192.10 a week, per the BBC.
Why it is not settled yet
One input is still missing. September’s inflation figure is published in October. If CPI comes in above 3.9%, inflation becomes the measure that counts and the rise would be larger. If it comes in below, earnings stays the driver. The government confirms the figure in the autumn, the BBC reports.
The tax question
The £13,000 mark matters for a second reason. The personal allowance, the income you can receive before paying income tax, is frozen at £12,570. At about £13,036, the full new State Pension on its own would sit roughly £466 above it, a point both the BBC and This is Money highlight.
Downing Street has said retirees whose only income is the State Pension will not pay tax on it, The Guardian reports. How that will work in practice has not been set out in the coverage so far. For anyone with a private or workplace pension on top, the existing rules apply as normal.
What to watch
The next date that matters is the September inflation release in October. After that the uprating is confirmed and takes effect in April 2027.
The April 2027 State Pension Rise and Tax
How much will the State Pension be in April 2027?
If the 3.9% earnings figure is used, the full new State Pension would rise to about £250.70 a week, or about £13,036 a year. The figure is confirmed in the autumn.
Will I pay tax on the State Pension if it goes over £13,000?
The full new State Pension would exceed the £12,570 personal allowance, but Downing Street has said retirees with no other income will not pay tax on it, The Guardian reports.
Sources
- The new State Pension: what you will get — GOV.UK
- What is the triple lock and how much is the state pension worth? — BBC News (via Yahoo Finance)
- State pension set to rise £500 and top £13,000 a year from next spring - but with an income tax sting — This is Money
- UK retirees with no other income will not pay tax on new £13,000 state pension, No 10 says — The Guardian