Each year, the state pension goes up by something called the triple lock. This means state pension payments will increase by either September's CPI inflation figure, average earnings growth between May and July, or 2.5% – whichever is higher.
Here, Which? reveals why the state pension is likely to increase by wage growth in the 2025-26 tax year and how to check your state pension forecast.
How the triple lock works
Brought in by the Conservative-Liberal Democrat coalition government in 2011, the triple lock guarantee means payments are increased each year by whichever rate is higher out of:
However, despite this, all major parties — including Labour – in the run-up to the general election pledged to keep the triple lock formula.
Find out more:How much could it rise by next year?
The government uses the average wage growth year-on-year for the May-to-July period.
We don’t have that figure just yet, but the Office for National Statistics (ONS) recently released figures showing average growth between April and June, which was 4.5% (including bonuses).Meanwhile, the latest CPI measure of inflation, which tracks the overall price changes for a basket of more than 700 popular goods and services, was 2.2% in July.So if wage growth remains higher than inflation, this figure will probably be used to determine the state pension increase next year.Helen Morrissey, head of retirement analysis at investment platform Hargreaves Lansdown, said: ‘Wage growth remains robust, so it’s highly likely that next month’s figure will be the one used to uprate state pension under the triple lock. 'This month’s figure comes in at 4.5% – way down on last month’s 5.7% – but it has been affected by the payment of one-off bonuses in the NHS last year.'Find out moreHow much could the state pension be worth next year?
Let’s presume the state pension increase is 4.5% (it may end up being more or less, depending on wage growth for May to July). Currently, the full level of the new single-tier state pension is £221.20 a week, or £11,502.40 a year. If it were to rise by 4.5%, it would be worth £231.15 a week, or £12,019.80 a year, which is a rise of over £517.Currently, the basic state pension is set at £169.50 a week in 2024-25 (£8,814 a year). A 4.5% increase would raise this to £177.50 a week (rounded to the nearest 5p) or £9,211.80 per year – a boost of £397.80.Find out moreWill pensioners pay tax on the state pension next year?
The state pension isn't tax-free, but the money you receive is paid 'gross' – without any tax being deducted.
If your total income from all sources – including the state pension – is greater than your personal allowance, tax is due on your state pension.
This will normally be deducted from any private pension or earnings you might have, which are paid through the PAYE system.
However, if you have no PAYE income, you'll have to complete a self-assessment tax return and pay any tax due directly to HMRC.
£12,019,So if you have a workplace pension, or any other form of income, it’s very likely this will push you over your personal allowance and into paying basic-rate tax.
Find out more:How to check your state pension forecast
If you're eligible to receive the state pension, it's paid to you when you've reached state pension age.
This is currently 66 for women and men, but two more increases are already set out in legislation.
Between 2026 and 2028 it will gradually rise to 67 for those born on or after April 1960, with another gradual rise to 68 between 2044 and 2046 for those born in or after 1977.
The amount you get depends on how many National Insurance Contributions (NICs) you've made during your working life.
You'll need at least 35 qualifying years of contributions to qualify for the full new state pension, and at least 10 years' worth to get anything at all.
If you reached state pension age before April 2016, you'll need 30 years of contributions to get the full basic state pension.
For anyone who hasn't yet reached the state pension age, you can use an online government tool to check your state pension forecast. This will tell you how much you can get, when you can start receiving payments, and whether you're able to increase them.
Find out moreThis article has been updated since it was first published on 23 July. The latest update was on 19 August with new average earnings growth data for April to June.
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