UK State Pension Set for £500 Annual Rise in 2027
The UK’s full new state pension is set to rise by 3.9% in 2027 after September inflation came in below wage growth. The increase follows the triple lock, which…
The latest inflation figures settle a key part of the UK state pension calculation: the full state pension confirmed for a rise of close to £500 a year in 2027, after wage growth outpaced September inflation. The increase is expected to be 3.9% under the triple lock, lifting annual payments above the personal allowance.
The figures released on Wednesday showed September inflation at 3.5%, below the previously confirmed 3.9% earnings growth for May to July. The i Paper reported that the earnings figure therefore sets the increase under the triple lock, which applies each April.
The difference matters to pensioners planning their income. The higher rate would take the full new state pension above the personal allowance, although a separate report from Yahoo Finance said an exemption had been declared for people whose sole income is the state pension.
Why the triple lock points to 3.9%
The triple lock raises the state pension by whichever is highest: consumer prices index inflation in the previous September, average annual total earnings growth in May to July of the previous year, or 2.5%. With inflation at 3.5% and earnings growth at 3.9%, wages provide the measure for this increase.
The i Paper said the inflation figure was confirmed on Wednesday morning. Its report describes the rise as close to £500 a year, but does not give a final revised weekly payment rate.
Yahoo Finance had earlier reported an expected 3.9% increase and estimated that the full new state pension would rise from £241.30 to approximately £250.70 a week. That report also calculated an annual rise from £12,547.60 to £13,036.40, based on the then-expected increase. The latest i Paper report confirms the inflation figure is below the earnings benchmark; it does not provide updated payment amounts.
The distinction is practical: the new rate would change the gross income pensioners receive, while whether any tax is due depends on their wider income and the exemption described in the earlier report. People with additional sources of income could face a different tax position from those relying only on the state pension, Yahoo Finance reported.
Tax questions remain alongside the increase
The earlier Yahoo Finance report said the personal allowance is £12,570 and that £466 of the projected full state pension would sit above it, potentially creating £93 in tax for a basic-rate taxpayer. It also said the actual amount could be slightly lower if part of the first week’s pension payment were paid at the previous year’s rate.
That report quoted Business Secretary Jonathan Reynolds as saying decisions about changes to personal allowances or tax rates would be made in the Budget. Reynolds also said most pensioners have income beyond the state pension, while acknowledging that some rely on it alone.
David Brooks, head of policy at Broadstone, said the increase and the prospect of pension income being taxed would renew discussion about the policy. The i Paper’s latest report confirms the two figures driving the calculation: earnings growth of 3.9% and September inflation of 3.5%.
Source: inews.co.uk
