The earnings data relates to the three months to July 2025 and includes bonuses and payments in arrears, while the inflation figure is the CPI (Consumer Prices Index) for the 12 months to September 2025. The 2026 increase will follow a similar boost to pension payments in April 2025 of over £450 a year and again sees pension benefit rises exceeding inflation.
Payments are expected to increase by £8.47 a week for those claiming the Basic State Pension and by £11.05 a week for anyone who reached State Pension age after April 2016 and is on the New State Pension. This translates to an annual increase of £440.41 for the Basic State Pension – bringing the yearly total to £9,614.80 – and £574.60 a year for the New State Pension, which brings its total to £12,547.60 a year.
Why is the State Pension going up?
State Pension increases are based on the triple lock system. It means that pensioners, especially pensioners with limited other income, are better protected against rising prices. The triple lock system also helps pensioner income keep up with the average wage growth of workers.
The calculation dictates that pension payments should increase by the higher of 2.5%, the CPI rate of inflation or wage growth. The CPI figure is taken from the September before the increase is due, while the wage growth figure is for the three months preceding July. The relevant figure for the April 2026 calculation is the wage growth figure of 4.8%, announced by the ONS in September. This is because the CPI rate for September 2025, announced this week, was lower at only 3.8%.
Keep in mind that the government is able to change the details of the triple lock, or even suspend it entirely. For example, back in 2021, it was decided that wage growth figures had been unfairly inflated to 8.8% by the withdrawal of COVID furlough payments, so the CPI rate of 3.1% was used instead. This can be done because the triple lock is a government commitment that it is not legally bound to stick to, rather than an act of parliament that is enshrined in law.
Read our article ‘What is the State Pension triple lock?’ for more details on how the system works.
What is the effect of the State Pension increase?
The basic consequence of this increase is that UK pensioners will have more money in their pockets. It means that they will be better protected against the rising cost of living, as the hike would outstrip inflation. However, even with the increase, the New State Pension will rise to just over £12,500 a year. This is unlikely to be a sustainable income for many pensioners, especially those facing higher living costs or those who are still making mortgage or rent payments every month. The State Pension for most retirees is used as a top-up, rather than a sole source of income. We cover the importance of private pensions in our article ‘What is a private pension?’.
The increase also means that more pensioners will find themselves much closer to having to pay income tax, or needing to pay more if they already do. £12,547.60 is close to the basic personal allowance of £12,570, so while the increase will be a significant cost to the treasury, some of that money will be returned in tax from pensioners with additional sources of income.
One flaw to the triple lock calculation that some pensioners might notice is the data lag. The figures used to calculate the April 2026 hike relate to July and September 2025, which means that by the time the rise comes into effect, the data used to calculate it will be out of date. For example, in April 2023 the State Pension increased by 10.1% on the back of the CPI for September 2022. However, CPI had dropped to 8.7% by the time the higher payments were introduced, so pensioners benefitted from a hike well above inflation. This can work both ways though, and means that pensioners could be getting a better or worse deal, depending on how the financial picture has changed since the relevant data was collected.
Will the State Pension rise again in the future?
The State Pension remains one of the Treasury's most expensive costs and the largest form of welfare spending in the UK. The OBR (Office for Budget Responsibility) calculated in March 2023 that State Pension costs would hit £147 billion by 2027/28. Some analysts have suggested that this increase is unsustainable and the triple lock should be axed.
In our article ‘What is the State Pension triple lock?’, we show how the triple lock has left State Pension payments significantly higher than if a single measurement had been used instead. State Pension increases are a regular topic for political debate and will likely continue to be in the coming years. This could result in regular alterations to the triple lock calculation, a complete overhaul of how the State Pension works or even the triple lock becoming a fixed commitment enshrined in law. The direction of travel will depend on the political landscape, which is very difficult to predict.
In the meantime, you can find out if you will be able to claim a State Pension by reading our article ‘Will I get a State Pension?’.
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