Earlier this year, Pensions Minister Torsten Bell quashed growing speculation on social media that the State Pension would become means-tested<\/a> under the Labour Government. However, Claire Trott, Head of Advice at St. James\u2019s Place, warns that the long-term sustainability of the State Pension Triple Lock is a topic that won\u2019t go away, despite political parties’ reluctance to address it.<\/p>\n She suggests one way around the ever-increasing costs of the Triple Lock could be to freeze the State Pension and increase access to Pension Credit, the most under-claimed means-tested benefit delivered by the Department for Work and Pensions<\/a> (DWP).<\/p>\n READ MORE: State Pension uprating will not be paid to thousands of older people next year<\/a>READ MORE: New State Pension payment warning to people nearing DWP retirement age<\/a><\/p>\n Another option could be to increase the State Pension age, which she said is the \u201cmost viable and publicly palatable option\u201d.<\/p>\n The State Pension age is set to start rising from 66 to 67 next year, with the increase due to be completed for all men and women across the UK by 2028.<\/p>\n The planned change to the official age of retirement has been in legislation since 2014 with a further State Pension age rise from 67 to 68 set to be implemented between 2044 and 2046.<\/p>\n People born on April 6, 1960 will reach State Pension age of 66 on May 6, 2026 while those born on March 5, 1961 will reach State Pension age of 67 on February 5, 2028. You can check your own State Pension age online here.<\/a><\/p>\n Ms Trott explained: \u201cThe long-term affordability of the Triple Lock has been questioned for some time and understandably so. With people living longer and the Triple Lock delivering higher increases more frequently than originally anticipated, the cost has exceeded expectations and is only set to rise further.<\/p>\n \u201cYet despite the fiscal pressure, it remains a politically sensitive promise. With many pensioners still living in poverty, and also being a reliable voting demographic, few politicians are willing to risk tampering with it.<\/p>\n \u201cIf reform were to be considered, any proposal would need to ensure adequate support for those on the lowest incomes. Means-testing is often raised as a solution, but in practice it\u2019s unlikely to be pursued, given the cost and complexity of implementation outweighs the savings.\u201d<\/p>\n The financial expert continued: \u201cThere are other options such as freezing the State Pension and increasing access to Pension Credit which might be a more pragmatic route – it\u2019s already in place and better targeted to those who need help most.<\/p>\n \u201cRaising the State Pension age has been controversial in the past, but it\u2019s arguably the most viable and publicly palatable option in the longer term, as people continue to live and work for longer.\u201d<\/p>\n State Pension Triple Lock<\/p>\n Nearly 13 million State Pensioners across Great Britain, including over one million living in Scotland, should start to keep an eye on the Consumer Price Index (CPI) inflation rate as it forms part of the Triple Lock measure which determines the annual uprating for the contributory benefit.<\/p>\n The latest figures from the Office for National Statistics<\/a> (ONS) show UK inflation remained at 3.8 per cent in August. Annual growth in employees’ average wages for regular earnings (including bonuses) was 4.7 per cent and looks set to be the driving measure of the Triple Lock.<\/p>\n Someone on the full New State Pension currently receives \u00a3230.25 per week, or \u00a3921 every four-week pay period.<\/p>\n Those on the full Basic State Pension receive \u00a3176.45 each week, or \u00a3705.80 every four-week pay period.<\/p>\n State Pension uprating predictions for 2026\/27<\/p>\n If the CPI figure published on October 22 is higher than the 4.7 per cent earning growth, that figure will be used to increase the New and Basic State Pensions.<\/p>\n The annual State Pension uprating won\u2019t be confirmed until the Autumn Budget on November 26, but pensioners – and those due to retire next year – can start to plan their finances by following the Triple Lock measurements.<\/p>\n Full New State Pension<\/p>\n An increase of 4.7 per cent would see those on the full, New State Pension receive the following amounts:<\/p>\n Full Basic State Pension<\/p>\n An increase of 4.7 per cent would see those on the full, New State Pension receive the following amounts:<\/p>\n The annual uprating won\u2019t be confirmed until the Autumn Budget, but pensioners – and those due to retire next year – can start to plan their finances by following the Triple Lock measurements.<\/p>\n State Pension and tax<\/p>\n The Labour Government confirmed earlier this year that the Personal Allowance will remain frozen at \u00a312,570 until April 2028.<\/p>\n If the New and Basic State Pension increased by the lower measure of the Triple Lock (2.5%), it would see the full New State Pension exceed the income tax threshold by nearly \u00a379 in the 2027\/28 financial year (\u00a312,578.80).<\/p>\n While the amount of State Pension to be taxed may seem relatively small – tax is only paid on the amount over the Personal Allowance – older people with other income streams could find themselves having to part with more cash to pay a tax bill – if it\u2019s not automatically deducted from private or workplace pensions through PAYE.<\/p>\n And remember, that figure is based on the lower measure of the Triple Lock. Using the current projections, more pensioners could be dragged into the retirement tax net sooner, especially if they have additional income through a private or workplace pension.<\/p>\n What is taxed<\/p>\n Guidance on GOV.UK<\/a> states: \u201cYou pay tax if your total annual income adds up to more than your Personal Allowance. Find out about your Personal Allowance and Income Tax rates.<\/p>\n Your total income could include:<\/strong><\/p>\n Check if you have to pay tax on your pension<\/p>\n Before you can check, you will need to know:<\/p>\n You cannot use this tool if you get:<\/strong><\/p>\n Use this online tool at GOV.UK<\/a> to check if you have to pay tax on your pension.<\/p>\n The full guide to tax when you get a pension can be found on GOV.UK here.<\/a><\/p>\n Join the conversation on our Money Saving Scotland Facebook group<\/a> for money-saving tips, the latest State Pension and benefits news, energy bill advice and cost of living updates.<\/p>\n Sign up to our Record Money newsletter and get the top stories sent to your inbox daily from Monday to Friday with a special cost of living edition every Thursday – sign up here<\/a>.<\/p>\n You can also follow us on X<\/strong> (formerly Twitter) @Recordmoney_<\/a> for regular updates throughout the day or get money news alerts on your phone by joining our Daily Record Money WhatsApp community<\/a>.<\/p>\n\n
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