From MoneyWeek · · 2m
State pension jumps 3.9% in April 2027
Wage growth just set next year's pension rise, and it pushes the full new state pension past the tax-free line for the first time.
In brief
Wage growth just set next year's pension rise, and it pushes the full new state pension past the tax-free line for the first time. The full new state pension is on track for about £13,036 a year, roughly £466 above the frozen £12,570 personal allowance, so plan for tax on other income now. Originally reported by…
Pensions rise 3.9% next April
Pensioners are on course for a 3.9% state pension increase from April 2027, following fresh wage data published on 15 September.
How the triple lock picks
Each April the state pension rises by whichever is highest: September's CPI inflation, average earnings growth from May to July, or a flat 2.5%.
Earnings won this year
ONS provisional figures put May to July earnings growth at 3.9%. CPI was 2.9% in July, so wages set the pace unless inflation spikes by September 2026.
Not final until the Budget
Chancellor John Healey is expected to confirm the figure in next month's Autumn Budget. October revisions to the wage estimate are possible but usually small.
What you actually get
The full new state pension looks set to go from £241.30 a week (about £12,547 a year) to £250.70 (about £13,036). The basic pension moves from £184.90 to £192.10 a week.
“it's looking very likely that the value of the full new state pension will surge past £13,000”
Not everyone gets 3.9%
Some pensioners sit outside the triple lock entirely, and on the old state pension only parts rise by it. Add-ons like SERPS and state second pension track inflation instead.
Past the tax-free line
The personal allowance is frozen at £12,570, so the full new state pension now clears it. Even someone with no other income lands in the basic rate band.
“Even using the lowest measure of 2.5% under the triple lock means the full state pension amount would exceed the personal allowance”
A promised reprieve
Former chancellor Rachel Reeves said those pensioners should not have to pay that small tax bill, with details due at the Budget. LCP reckons one in 16 pensioners benefit as things stand.
Three moves that cut the bill
Draw only the pension income you need and leave the rest invested. Use ISAs to shelter gains and interest. Couples can shift assets to use both sets of allowances.
“a considered approach to tax and retirement is needed to make sure you keep as much of your hard-earnt savings as possible”
What matters most
The full new state pension is on track for about £13,036 a year, roughly £466 above the frozen £12,570 personal allowance, so plan for tax on other income now.
