Earnings revision to deliver 4.8% increase to State Pension and exceed Personal Allowance in 2026/27

Average earnings growth has been revised up to 4.8%, pushing the full new State Pension to an estimated £12,590 next April – for the first time exceeding the Personal Allowance. David Brooks of consultancy Broadstone warns this could mean pensioners face tax on their income while highlighting the rising cost of the Triple Lock.

Today’s employment figure saw the average earnings growth for May-July – the figure that is extremely likely to drive this year’s Triple Lock – revised up from 4.7% to 4.8%.

That means that the full new State Pension is likely to increase to around £12,590 next April for 2026/27 and for the first time rise above the Personal Allowance (£12,570).

The DWP calculates the State Pension increase by applying the uprating to the weekly total, converting to a day rate and then multiplying by 365.25.

David Brooks, Head of Policy at leading independent consultancy Broadstone, commented:

“For the first time ever, it looks likely that the State Pension will exceed the Personal Allowance meaning those in receipt of the full new State Pension will be taxed on that income.

“It is bad news for the Chancellor who will have to fund the increased cost of providing this benefit to pensioners next year. With the State Pension Age Review ongoing, it is a timely reminder of the accelerating cost of the Triple Lock and that amendments appear inevitable looking to the future.

“In the short-term, budgetary pressures remain tight and so, as we head towards winter, the news will be positive for those pensioners who rely on the State Pension to provide the majority of their income.”