The annual State Pension uprating next April will be calculated using the earnings growth measure of the Triple Lock after new figures published by the Office for National Statistics (ONS) on Wednesday showed the Consumer Price Index (CPI) inflation rate for September was 1.7 per cent.
Under the Triple Lock, the New and Basic State Pensions increase each year in-line with whichever is the highest between the average annual earnings growth from May to July (4.1%), CPI in the year to September (1.7%), or 2.5 per cent. Additional State Pension elements and deferred State Pensions rise each year with the September CPI figure.
This means that under the earnings growth figure of 4.1 per cent, people on the full New State Pension will see payments rise by £9.10 per week from £221.20 to £230.30 and as the payment is typically made every four weeks this amounts to £921.20. This will see annual payments rise by £473.60 from £11,502 to £11,975.60 over the 2025/26 financial year.
Similarly, someone on the full Basic State Pension will see weekly payments rise by £6.95 per week from £169.50 to £176.45, or £705.80 every four-week payment period. Annual payments will rise by £361.40 from £8,814 to £9,175.40 over the 2025/26 financial year.
Chancellor Rachel Reeves will confirm the annual State Pension and benefits uprating during the Autumn Budget on October 30, 2024. However, the Labour Government has made it clear that the Triple Lock will be honoured for the next five years.
Revised earnings growth figure
Last month, ONS figures indicated that earnings growth had increased by 4.0 per cent annually in the three months to July, however, when jobs data was released on Tuesday the figure had been revised up to 4.1 per cent.
Former Liberal Democrat pensions minister, Sir Steve Webb, said the additional 0.1 percentage point could add around £100 million to the State Pension bill under the Triple Lock.
Sir Steve, who is now a partner at consultants LCP (Lane Clark & Peacock) said: “A slightly higher rate of increase is welcome for pensioners, though will be an unwelcome £100 million extra cost for the Chancellor as she prepares her Budget.
“The rate of the new State Pension will now be close to £12,000 per year, very near to the £12,570 tax-free Personal Allowance. This is likely to put extra pressure on the Chancellor to take action on tax allowances in the coming years.”
State Pension payments 2025/26
The calculations below are based on the latest ONS figures using the 4.1 per cent earnings growth as the multiplier. It’s important to be aware these figures are based on someone in receipt of the full payment.
Full New State Pension
- Weekly payment: £230.30 (from £221.20)
- Four-weekly payment: £921.20 (from £884.80)
- Annual amount: £11,975 (from £11,502)
Full Basic State Pension
- Weekly payment: £176.45 (from £169.50)
- Four-weekly payment: £705.80 (from £678)
- Annual amount: £9,175 (from £8,814)
Recent analysis released by Royal London revealed only around half of people receiving the New State Pension last year were getting the full weekly amount – and around 150,000 were on less than £100 per week.
The Department for Work and Pensions (DWP) issues letters to all 12.7 million State Pensioners telling them their new payment rates – this is usually issued at the start of the new year.
Sir Steve added that living costs will still eat into rising pensions. He said: “Even a slightly improved pension rise will however leave many pensioners out of pocket in real terms overall next April.
“More than half of next year’s increase will simply be keeping pace with inflation. Taking account of inflation and the loss of Winter Fuel Payments, older pensioners who lose winter fuel payments at the £300 rate will be worse off overall.”