1 week ago
26
Image source, Getty Images./BBC
The new full state pension is set to rise by £460 a year from April 2025.
The increase is pegged to wages, which have gone up by 4%.
Under an arrangement called the "triple lock", the state pension goes up each year by either 2.5%, inflation, or earnings growth - whichever is the highest figure.
What is the state pension and how much is it worth?
The state pension is a payment made every four weeks by the government, to people who have reached the qualifying age and have paid enough National Insurance contributions.
In April 2025, the earnings link is expected to make the state pension worth:
In April 2024, the link to earnings meant the state pension went up by 8.5%, making it worth:
The final amounts for 2025 will be decided by the Work and Pensions Secretary, Liz Kendall, around the time of the Budget. They may be slightly different if official earnings figures are revised, which does sometimes happen.
What is the state pension 'triple lock' and how does it work?
Under the triple lock system, the state pension increases each April in line with whichever of these three measures is highest:
inflation in the September of the previous year, using a measure called the Consumer Prices Index (CPI)
the average increase in total wages across the UK for May to June of the previous year
or 2.5%
The triple lock was introduced by the Conservative-Liberal Democrat coalition government in 2010.
It was designed to ensure the value of the state pension was not overtaken by the increase in the cost of living or the incomes of working people.
Chancellor Rachel Reeves has said the Labour government will keep the triple lock until the end of the current Parliament.
What is the state pension age and how is it changing?
More than 12 million people currently receive the state pension.
Men and women born between 6 October, 1954 and 5 April, 1960 start receiving their pension at the age of 66.
But for people born after this date, the state pension age is increasing:
a gradual rise to 67 for those born on or after 5 April 1960
a gradual rise to 68 between 2044 and 2046 for those born on or after 5 April 1977
There was speculation in the run-up to the 2023 Budget that the second increase would be brought forward, potentially to the late 2030s.
However, in March 2023, the previous Conservative government said it had no plans to change the timetable.
The International Longevity Centre UK think tank, which tracks the impact of growing life expectancy and falling birth rates, argues that the UK will have to increase the state pension age to 71 by 2050,, external to keep the cost sustainable.
The state pension cost £110.5bn, external in 2022-2023, just under half the total amount the government spends on benefits.
The Office for Budget Responsibility expected this to grow to £124bn for 2023-2024.
What is pension credit and who is eligible?
Depending on their overall income, those above retirement age may also be entitled to pension credit, external in addition to the basic state pension.
From April 2024, pension credit tops up weekly income to:
£218.15 if you are single
£332.95 if you have a partner
If your income is already above those limits, you might still be eligible if you have a disability or care for someone.
Anyone who qualifies for pension credit may also be entitled to other financial support, housing benefit, a reduction in council tax, or help with heating costs through winter fuel payments and the warm home discount scheme, external.
How much is the winter fuel payment and how are the rules changing?
Chancellor Rachel Reeves has said that from autumn 2024, anyone not on pension credit or other means-tested benefits will no longer get the winter fuel payment.
Previously, everyone in England and Wales born before 25 September 1957 was entitled to the payment, which is worth between £100 and £300.
About 10 million people will be affected.
While some say they don't need the payment, a number of charities and MPs are concerned that people on a relatively small income will miss out.
An estimated 880,000 eligible pensioners fail to claim pension credit.
Reeves has urged Labour MPs to support the cut in a vote in Parliament on Tuesday, after speculation that some may vote against it.
The Scottish government has also said it will end pensioners' universal entitlement to the Winter Heating Payment, external which it offers.
English (US) ·