The State Pension is set to rise by 4.8% in 2026, but not all pensioners will be paid at the same rate thanks to two different State Pension schemes
UK’s older state pensioners are set to receive £2,933 less in State Pension payments per year in 2026 compared to younger retirees due to the triple lock system.
The government increases the State Pension rates at the start of every new tax year in April and the amount it goes up by is determined by one of three factors – known as the ‘triple lock’. These are the consumer price index (CPI) measure of inflation (measured for September in the previous year), average wage growth between May and July of the previous year, or 2.5%.
Whichever is the highest out of these three will determine how much the State Pension is increased in the new tax year. Pensioners are on course for a 4.8% rise in the State Pension from April 2026, in line with average wage growth, after Office for National Statistics (ONS) figures were released this week.
The figures showed that CPI inflation for September was 3.8%, remaining at the same level as both July and August. Previously-released figures showed that total wage growth, including bonuses, for the quarter to July was 4.8%, making this the highest of the three figures and the key figure that is expected to be used for April’s State Pension increase, reports the Express.
But as the UK’s State Pension system is split into two different schemes – basic and new – not all pensioners will be paid at the same rate. The 4.8% increase means that people getting the full new State Pension are set to receive £241.30 per week, which amounts to an estimated £12,548 per year.
However, elderly pensioners collecting the full basic State Pension will receive just £184.90 weekly in comparison, totalling approximately £9,614.80 per year – a staggering £2,933.20 less than more recent retirees.
Gentlemen born prior to 6 April 1951, and ladies born before 6 April 1953, are entitled to the basic State Pension, whilst anyone born following these dates can claim the new State Pension alternatively, which offers a superior rate. Based on UK Parliament figures, roughly 8.57 million pensioners were drawing the basic State Pension during the 2024/25 tax year, whilst merely 4.38 million were new State Pension recipients.
Given that the overwhelming majority of pensioners receive the basic State Pension, it indicates approximately 8.57 million are poised to lose out on as much as £2,933.20 yearly when the fresh rates come into force. However, age isn’t the sole consideration in establishing which State Pension you receive, with all those qualifying for the basic State Pension having already reached State Pension age, though the amount you receive also relies on your National Insurance contributions.
The anticipated 4.8% rise in 2026 might also result in additional pensioners beginning to pay tax on their State Pension as the rates could push them beyond the personal allowance limit. Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the online investment platform, said: “For pensioners, the latest inflation data suggests another inflation-beating boost to the annual state pension payment is coming their way next April.”
She further commented: “The personal allowance has remained at £12,570 since the 2020-21 tax year, so unless the Chancellor revises this in the Budget, more retirees may find themselves paying a tax bill. Of course, some will already be paying tax on their retirement income, either because they deferred access to the state pension or because they also receive income from a private pension.”
Looking for more from MyLondon? Subscribe to our daily newsletters here for the latest and greatest updates from across London.
