The Office for National Statistics has announced that the Consumer Prices Index (CPI) rose by 3% in the 12 months to February 2026, unchanged from the 3.0% figure for January.1
Based on the earnings growth element of the triple lock, the state pension will increase by 4.8% from 6 April, meaning state pensioners are currently in line for an above-inflation boost to their income.
However, this increase means the state pension will be just £23 under the personal allowance limit (£12,570), at which point it would become liable to income tax. As of yet, the government has offered no clear plan as to what this means for state pensioners.
Kate Smith, Head of Pensions at Aegon, said: “In just over a week’s time, state pensioners will receive a welcome 4.8% boost to their income, as the increase calculated by the triple lock formula kicks in from 6 April.
“This year’s increase represents the fourth-highest jump since the triple lock was introduced in 2011 – a system whereby the state pension increases annually at whichever is highest out of CPI inflation for September, earnings growth for May to July, or a 2.5% minimum.
“Those who reached state pension age from 6 April 2016 onwards, and are therefore eligible for the new state pension, will now see their full entitlement increase by £574, going from £11,973 to £12,547 a year.
“While those who reached state pension age before 6 April 2016, and are therefore eligible for the basic state pension, will receive a £439 increase, jumping from £9,175 to £9,614 per year.
“Given today’s announcement that inflation currently sits at 3%, state pensioners may be particularly pleased to see that their increase is above the rate at which costs are rising, indicating their income may be able to go a little further too.
“However, with inflation widely predicted to increase in the coming months as a result of the ongoing conflict in the Middle East, this optimism might not last as long as hoped.
“Another thing that shouldn’t go unnoticed is that the new state pension will now sit just £23 under the personal allowance limit of £12,570. Should the amount cross this threshold when it increases again next year, a portion of the state pension would become liable to the basic 20% rate of income tax. For example – assuming just the minimum 2.5% increase is applied, the new state pension would rise to £12,861 and £58 of tax would be owed.
“While many pensioners already pay income tax because of money from other sources, including private pensions, there has been concern regarding the impact of this on vulnerable pensioners, particularly those who rely solely on the state pension.
“The Chancellor has offered some clarity on the situation, saying that no one who receives the state pension as their only source of income will have to pay income tax on it during this parliament. However, there have been no announcements as to how the government plans to achieve this from an administrative perspective.
“This solution also raises questions of fairness, as those with very small private pension income and those working on a wage similar to the state pension would still be expected to pay their tax bill.
“We called for clarity when this year’s state pension increase was confirmed in the last Budget – and reiterate that call now. The government needs to outline their long-term plans for the possible tax liability that looms for millions of state pensioners, enabling them to feel more confident in their financial situation and plans for the future.”
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