The state pension is on track to rise by 4.7% next April after new labour market figures confirmed average earnings growth.
The news raised questions about the long-term sustainability of the triple-lock guarantee and its clash with frozen tax thresholds.
The Office for National Statistics (ONS) reported today (16 September) that annual earnings growth including bonuses stood at 4.7% in the three months to July 2025.
Unless September’s inflation figure surpasses this level, the earnings data will determine next year’s rise in the state pension.
That would see the full new state pension increase from £230.25 a week to £241.05, worth £12,534.60 a year.
The basic state pension would rise from £176.45 to £184.75 per week.
The triple lock guarantees the state pension will rise each April by the highest of earnings growth, inflation or 2.5%.
With inflation running at 3.8% in the year to July, and unlikely to rise above 4.7%, according to Bank of England forecasts, the earnings figure is expected to be the key driver.
Rachel Vahey, head of public policy at AJ Bell, said: “Pensioners will be rejoicing at the prospect of an inflation-busting rise to the state pension from April next year as a result of the triple lock guarantee.
“Provided inflation doesn’t spike above 4.7% in September, all stars point to these latest earnings figures boosting the new state pension to £12,534.60 from April 2026 – putting it above £12,000 for the first time ever and perilously close to the frozen personal allowance.”
The personal allowance remains fixed at £12,570 until April 2028.
On current projections, the full state pension will exceed this level in April 2027, meaning retirees relying solely on the benefit will pay income tax for the first time.
“This poses a significant conundrum for Rachel Reeves and the Treasury,” Vahey added.
“Removing the freeze on the personal allowance would come at significant cost […] while an overhaul of the triple lock would come with huge political risk before the next general election.”
Steve Webb, partner at consultancy LCP, warned that the freeze is already pulling more retirees into tax.
“The standard rate of the new state pension is creeping ever closer to the frozen personal tax allowance.
“We know for certain that someone who has no other income aside from the new state pension will be a taxpayer come April 2027.
“Nearly three quarters of all pensioners already pay income tax, and the freeze in thresholds coupled with steady rises in the pension will drag more and more into the tax net.”
Andrew Tully, technical services director at Nucleus, said the increase would be “a welcome boost to many pensioners”, but noted it also creates administrative challenges.
“It means many more will pay income tax solely as a result of their state pension given the ongoing freeze to the personal allowance, and Government will need to consider the best process to easily allow these people to pay tax.”
The Office for Budget Responsibility (OBR) has projected that pensioner spending will rise to £182bn by 2029/30.
Against this backdrop, the Government has revived the Pensions Commission to review the system, including the triple lock and state pension age, which is due to rise from 66 to 67 between 2026 and 2028.
