State Pension could rise by £550+ thanks to Triple Lock as earnings growth outpaces inflation

Unsplash - 0206/2025

New analysis from leading independent financial services consultancy Broadstone suggests the State Pension is set for another significant uplift under the Government’s Triple Lock policy.

With average earnings growth including bonuses currently running at 4.6% – and just one month of data still to be published – increases are expected to outpace inflation. If this rate were maintained in September, the new State Pension would rise annually by £551, taking it to around £12,524 a year from £11,973.

While the increase is unlikely to be enough to tip the full new State Pension over the personal tax allowance, it is still likely to cause even more pensioners to be liable for income tax given the ongoing freeze to the personal tax allowance at £12,570 a year.

Pension Type Current (2025/26) Possible (2026/27) based on 4.6% rise £ increase (4.6%) Possible (2026/27) based on 4% rise £ increase (4%) 
New State Pension £11,973 / year £230.25 / week £12,524 / year £240.84 / week +£551 / year +£10.59 / week £12,452 / year £239.46 / week +£479 / year +£9.21 / week 

The latest HMRC data shows 8.7 million people of State Pension age or older are projected to pay income tax on retirement income in 2025/26, a rise of around 420,000 compared to the previous year (2024/25) and a rise of 1.85 million from ten years ago (2015/16).

David Brooks, Head of Policy at Broadstone, said:

The good news is this will provide further financial assistance to pensioners in light of ongoing cost-of-living pressures and the reliance of many retirees on the State Pension as their main source of income. 

The bad news is that the rising costs of the benefit risks creating growing tension between today’s taxpayers who fund the system and current pensioners who rely on it. The Government and Pensions Commission will be under pressure to confront this challenge as part of the independent State Pension age review. 

It seems inevitable that, while the State Pension will and should remain a bedrock of retirement provision, calls to introduce means-testing will grow louder. These should be resisted, but what remains on the table is the possibility of the cost being met by wealthier pensioners via the introduction of a national insurance contribution of some kind or a winding down of the Triple Lock.

Ultimately, the cost of the State Pension is a political decision. The persistence of the Triple Lock has created a steady rise in costs without clear long-term policy direction. As the retired population grows and depends increasingly on today’s workers to fund the system, some form of change is unavoidable.

Related Articles

Sign up to the IFA Newsletter

Name

Trending Articles


IFA Talk is our flagship podcast, that fits perfectly into your busy life, bringing the latest insight, analysis, news and interviews to you, wherever you are.

IFA Talk Podcast – listen to the latest episode

IFA Magazine
Privacy Overview

Our website uses cookies to enhance your experience and to help us understand how you interact with our site. Read our full Cookie Policy for more information.