UK State Pension Set to Rise by £489 a Year in 2027

Millions of UK pensioners are expected to receive higher state pension payments from April 2027 after official inflation figures confirmed that September's consumer price index (CPI) inflation rate was 3.5%. The increase is expected to reach 3.9% under the triple lock, adding nearly £500 a year to the full new state pension.

The earnings growth figure relevant to the calculation was previously confirmed at 3.9%, exceeding the latest inflation rate. Under the triple lock, annual increases are determined by whichever is highest: September CPI inflation, average annual earnings growth between May and July, or 2.5%.

The government is expected to confirm the increase at the Budget, according to the report published by iNews on October 21, 2026.

The full new state pension currently pays £241.30 a week to people who reached state pension age on or after April 6, 2016. A 3.9% increase would raise that amount to approximately £250.70 a week, lifting annual payments from £12,547 to £13,036, an increase of £489.

People who retired before April 6, 2016, and receive the basic state pension would see their maximum weekly payment rise from £184.90 to £192.10 under the same projected increase. However, pensioners without a complete National Insurance contribution record receive less than the full rate.

Recipients of an additional state pension, including the State Earnings-Related Pension Scheme (SERPS), would receive an inflation-linked increase on those additional payments rather than the 3.9% earnings-based increase.

The projected increase also has implications for income tax. The standard personal allowance remains £12,570, above which income is generally subject to basic-rate tax of 20%. Pension income from different sources is combined when calculating taxable income.

Because state pension payments initially use the previous year's rate for the first week of the new tax year, someone receiving only the full new state pension would collect £13,027 during the 2027-28 tax year, according to the report. That would leave £457 above the personal allowance, equivalent to £91.40 in basic-rate tax.

HM Revenue and Customs uses Simple Assessment to collect certain tax liabilities from people who do not otherwise need to file a tax return. Former chancellor Rachel Reeves pledged in last November's Budget that "people only in receipt of the basic or new state pension do not have to pay small amounts of tax through Simple Assessment from April 2027".

The proposed exemption applies only to people whose sole income is the basic or new state pension. Those receiving private or workplace pensions, savings interest, or employment income may still owe tax on the portion of their combined income above £12,570.

The report also said Andy Burnham intends to maintain the existing triple lock for the remainder of the current Parliament, in line with Labour's manifesto commitment. A Treasury spokesperson said the government was "committed to that over this Parliament".

Burnham announced at Labour's annual conference in September 2026 that he intends to change the mechanism from April 2030 to help finance a new National Care Service. Under the proposed system, the automatic earnings-based element would be removed, while annual increases would remain at least as high as inflation or 2.5%, alongside a new mechanism intended to preserve the pension's value relative to average earnings over time.