Pensioners will see many money changes start to be implemented from the start of 2026State Pension rates will increase in April

There are some major changes coming for pensioners in the new year following the Autumn Budget in November. Changes include pension rates increasing, winter fuel repayments being taken by HMRC and the pension age starting to go up.

Chancellor Rachel Reeves delivered her second annual Autumn Budget on November 26 where she announced a raft of money changes that will come into affect throughout the new year.

Every year, State Pension rates go up in line with the triple lock promise – meaning that they will increase by whichever is greater out of inflation, earnings or 2.5%. Ms Reeves confirmed at the Budget that this year they will go up in line with inflation.

The government has also announced it is launching the third independent review of the State Pension age and a new Pensions Commission. The initiative aims to help build a strong, fair, and sustainable pension system that is fit for the future, according to Labour.

Many of the changes being implemented will come into force in April at the start of the new financial year. The Manchester Evening News has taken a look at the major changes that will affect pensioners during 2026.

State Pension rate increases

State Pensions are set to rise by around £575 a year for most pensioners, Ms Reeves confirmed when she delivered her second Autumn Budget in November. Pensions will increase in April in line with the average earnings growth figure for May to July 2025.

State Pensions increase each April and the amount they go up by is worked out by the triple lock – a mechanism used to ensure the payment rates rise each year in line with whichever is higher out of inflation, earnings or 2.5%. This is to prevent the value of pensions being reduced by cost of living pressures.

The exact amount that state pensions are set to rise by next year was confirmed following the release of the latest inflation data by the Office for National Statistics. UK inflation remained unchanged at 3.8% in September – despite the majority of economists and the Bank of England having expected inflation to rise to 4%. The inflation figure for September is particularly important, as it is also used to help calculate how much many other welfare benefits will rise by next April.

The triple lock ensures the State Pension increases every April in line with whichever is the highest of earnings growth between May and July, inflation in September, or 2.5%. Wage growth for May to July was 4.8% and as this is higher than September inflation, this is the figure that will be used to increase the State Pension by next year.

This means that the 4.8% figure is the amount that State Pensions will be increased by in April – pushing the full New State Pension up to £241.30 per week, while the full basic State Pension will increase to £184.90 per week.

State Pension to not exceed personal allowance

For a while there has been speculation that when State Pension rates increase in April some pensioners would be pushed into paying income tax as their earnings exceed the £12,570 personal tax allowance. Personal allowance – the income you don’t pay any tax on – is frozen at £12,570 until 2028, but as state pension rates go up, more retirees have been scared they will see themselves pulled into the tax net each year.

The full new state pension is already very close to using up all the £12,570 tax-free allowance, and becoming subject to income tax. However, the Government has since confirmed that anyone whose sole income is the State Pension will not pay income tax when rates increase above the personal allowance in the coming years.

Winter fuel payments to be paid back

The Government has been paying up to £300 in Winter Fuel Payments to eligible pensioners this year. The majority of payments have been sent out over November and December.

Pensioners who earn less than £35,000 a year are eligible to keep the payment. But those who earn over this income threshold will have to pay it back to HMRC. Repayments will be automatic and HMRC will contact you and take the money back by adjusting your tax code (PAYE) in the 2026-2027 tax year or adding it to your 2025-2026 Self Assessment tax return, meaning you don’t need to do anything.

For a typical winter payment of £200, approximately £17 per month will be deducted from a PAYE customer. An online calculator is available on GOV.UK to help pensioners assess whether their income exceeds the total income threshold.

For people who didn’t get a Winter Fuel Payment but believe they are entitled to one, the government advises waiting until January 28. If the money has’t landed in your bank account by then, you should contact the DWP after that date.

Pension age to start increasing

The State Pension age is set to begin rising from 66 to 67 next year, with the increase expected to be completely implemented for all men and women across the UK by 2028. This planned change to the official retirement age has been scheduled since 2014, with a further rise from 67 to 68 planned to take place between 2044 and 2046.

The Pensions Act 2014 accelerated the increase in the State Pension age from 66 to 67 by eight years. The UK Government also modified the phasing of the State Pension age rise, meaning that rather than reaching State Pension age on a particular date, individuals born between 6 March 1961, and 5 April 1977, will be entitled to claim the State Pension once they reach 67.

Specialists say that people need to prepare for the alterations so they won’t be caught off guard financially. All those impacted by modifications to their State Pension age will receive correspondence from the Department for Work and Pensions (DWP).