State Pensioners to receive hundreds more a year as Reeves confirms 4.8pc rise

The increase will come into play from April 2026, with more than 12 million people benefiting

Millions of pensioners will see a boost in payments after the Chancellor of the Exchequer announced a higher-than-inflation rise. As part of today’s Budget announcement more than 12 million people will experience an increase in their State Pension from April next year.

This includes approximately 4.1 million people on the full rate of the New State Pension who will gain an extra £575 a year. And around 8.8 million people who get the pre-2016 State Pension will benefit from an additional £440.

It comes as part of what is known as the triple lock, which guarantees that the state pension goes up each year in line with either inflation, wage increases or 2.5 per cent – whichever is the highest.

Average wages in the UK have rised by 4.8 per cent, and State Pensions will now match this, Ms Reeves confirmed today. Prior to her announcement, Rachel Reeves said: “Whether it’s our commitment to the triple lock or to rebuilding our NHS to cut waiting lists, we’re supporting pensioners to give them the security in retirement they deserve.”

Ahead of the announcement, Aegon pensions director, Steven Cameron, said that although the planned rise was welcome, the increase does come with a “sting in the tail for future years”.

“Under the triple lock, the full state pension will increase by a minimum of 2.5 per cent in future years, meaning in 2027/28 it will be at least £12,861,” he was reported saying in Pensions Age.

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“This is above the personal allowance of £12,570, which is already frozen until April 2028, with speculation of an extended freeze until 2030. This means someone whose sole income is the full new state pension will face a tax charge on the excess, a minimum of £58 a year – something many will see as a case of giving with one hand and taking with the other.

“Currently, there is no facility to deduct tax direct from state pensions, with income tax on overall retirement incomes being deducted from private and workplace pensions.

“So those with solely a state pension could face receiving letters from the taxman demanding they pay the tax due. While of modest amounts, this could create anxiety amongst many vulnerable pensioners.”

During the Budget announcement, Ms Reeves also stated she will abolish access to class 2 National Insurance contributions to people living abroad meaning fewer people will qualify for the State Pension.