Exact amount YOUR state pension will rise next year confirmed as Labour set to axe triple lock

Serious caucasian old elderly senior couple grandparents family counting funds on calculator, doing paperwork, savings, paying domestic bills, mortgage loan, pension at home using laptop. Credit: Getty 1 comment 1 Next MILLIONS of pensioners are set for a bumper 3.9% state pension boost next year after the final figure used to calculate the triple lock was confirmed today. The state pension is on course to rise by 3.9% from April 2027, after September inflation came in below the rate of earnings growth used under the guarantee. The Consumer Prices Index (CPI) rose by 3.5% in the 12 months to September, up from 3.1% in August, according to the Office for National Statistics (ONS). But this is still below the 3.9% increase in average earnings recorded between May and July, meaning wage growth will determine next year’s state pension rise. Advertisement Sign up for the Money newsletter Thank you! Email address Please provide a valid email. Your info will be used in accordance with our Privacy Policy You'll now receive top stories, breaking news, and more, straight to your email. It comes after Labour announced it would revamp the triple lock from 2030 by changing the wage growth element, saving around £15bn which would help fund a new National Care Service. The service will provide free personal care for older people. MORE ON TAX 'BAD NEWS' PM's ally warns against raising taxes on business & more borrowing in Budget TAX RAID Brutal Budget wealth tax raid dropped by Labour over fears it would hurt economy Under the triple lock, the state pension increases each April by whichever is highest out of September’s inflation, average earnings growth between May and July, or 2.5%. The full new state pension is currently worth £241.30 a week, so a 3.9% increase would take this to around £250.70 a week from April, giving pensioners an extra £9.40 a week. Over a full year, someone receiving the full amount would get around £13,036.40 – an increase of £488.80. Meanwhile, retirees who reached state pension age before April 6, 2016 and receive the full basic state pension would see their weekly payments rise from £184.90 to around £192.10. Most read in Money JOBS BOOST British Airways opens applications for 200 early-career roles - how to apply BILL BLOW Inflation soars to highest level this year in blow to Labour ahead of Budget JOBS ARMY Amazon pledges 30,000 jobs for Britain's NEETs with £31k starting salaries APPRENTICE AXE The 10 degree apprenticeships you can apply for NOW That’s an extra £7.20 a week, or £374.40 over a year – meaning an annual payment of £9,989. The exact new rates are expected to be formally confirmed by the government in next week’s Autumn Budget. Advertisement In last year’s Budget, former chancellor Rachel Reeves confirmed that pensioners whose sole income is the state pension will not have to pay tax . However, the government has not yet confirmed how this would work. If anyone only on the state pension did have to pay income tax , they would owe around £93. Rachel Vahey, head of public policy at AJ Bell, said: “The Government has promised that those living solely on a state pension above the allowance will not pay income tax on it. “But how this policy will work and how any tax will be collected remains to be seen. Advertisement “The government stated that this will apply to people whose sole income is the state pension, but it wasn’t clear what else would be counted as income. “At the Budget on 28 October we may finally get some clarity on how this will work in practice.” How does the triple lock work? The triple lock was introduced to make sure the state pension does not lose value compared with either prices or workers’ wages. Each year, the government looks at three figures: CPI inflation in September, average earnings growth for the three months from May to July, or 2.5%. Whichever is highest determines how much the full new and basic state pensions rise the following April. Advertisement Average total earnings rose by 3.9% in the three months to July compared with the same period a year earlier. Today’s inflation figure of 3.5% means earnings growth is the highest of the three measures. Last April, pensioners received a larger 4.8% increase, which was also based on earnings growth. This took the full new state pension from £230.25 to £241.30 a week and the full basic pension from £176.45 to £184.90. Not everyone receives the full amount, however. How much state pension you get depends largely on your National Insurance (NI) record. People receiving the new state pension usually need around 35 qualifying years of NI contributions or credits to receive the full rate, although the rules can be more complicated if you were ‘contracted out’ before 2016. Advertisement State pension set to top tax-free allowance The latest increase would also push the full new state pension to £13,036, which is above the standard tax-free personal allowance of £12,570. This means someone receiving the full new state pension would technically have income around £466 above the threshold, before taking any private or workplace pensions into account. Andrew King, pensions specialist at wealth manager Evelyn Partners, said: ‘The April 2027 boost to the state pension means some retirees on the full flat rate could incur an income tax liability in 2027/28 even if they have no other income. “The new £13,036.40 annual payout would exceed the personal income tax allowance by just under £467, and at the basic rate of income tax that could mean just over £93 is owed to HMRC .” The state pension itself is paid without tax being deducted, but it counts towards your taxable income. Advertisement That means HMRC can collect tax owed through other pension income or, in some cases, through a separate tax bill. The government has previously said pensioners whose only income is the state pension should not be dragged into paying tax due to increases to the benefit. Labour set to change triple lock to double lock The rise under the triple lock comes as Labour prepares to revamp the triple lock into a ‘double lock’ from 2030 to fund a new care service instead. The government has committed to keeping the existing triple lock guarantee for the remainder of this parliament. But from 2030, the state pension will instead rise by the highest of inflation or 2.5%, and the earnings element would be removed – with the state pension instead tracking earnings over the long term. Advertisement RECOMMENDED STORIES Ministers say the change will also make the state pension bill more sustainable over time. Under the existing system, repeated triple-lock increases have pushed the state pension to a record high compared with average earnings. 1 comment 1