Under the Triple Lock<\/a>, State Pensions increase each year in-line with whichever is the highest of average annual earnings growth from May to July, Consumer Price Index inflation rate (CPI) in the year to September or 2.5 per cent.<\/p>\n However, finance experts warn the projected rise will see nearly 9 million pensioners<\/a> pay tax in retirement. This is because under a 4.8 per cent uprating, the full New State Pension will be worth \u00a312,547 over the 2026\/27 financial year, but the Personal Allowance will remain frozen at \u00a312,570 until April 2028.<\/p>\n READ MORE: Full list of New and Basic State Pension weekly payments due from April<\/a>READ MORE: Older people living on their own could be due annual State Pension boost of \u00a34,300<\/a><\/p>\n Around 8.4 million people receiving the Basic State Pension will continue to get significantly less, around \u00a39,614 a year, but could also find themselves edging closer to the tax threshold.<\/p>\n Amid growing concern over the long-term sustainability of State Pension increases and the tax implications for retirees, Derence Lee, Chief Finance Officer at Shepherds Friendly<\/a> shares his expert insight into what this means for pensioners and those approaching retirement.<\/p>\n Lee said: \u201cDue to the extremely high levels of inflation the UK has experienced since 2020, State Pensions have been increasing at a rate that some experts believe to be unsustainable in the long term.<\/p>\n \u201cWith pensions expected to surpass the frozen tax-free allowance limit next year, which will remain unchanged by the government until 2028, more retirees will be pushed into the tax-paying bracket. As a result, pensioners should begin to take into account that they may soon need to pay income tax on their pensions should no changes be made to current status-quo.<\/p>\n \u201cWhilst the Triple Lock has been helpful in ensuring retirees\u2019 incomes keep up with the cost of living, taxing pensioners could have significant financial implications, particularly for those who rely heavily on their pensions to cover essential living costs and make ends meet.\u201d<\/p>\n The finance expert continued: \u201cTo help with retirement costs, Pension Credit can help those of State Pension age on lower incomes. For example, single pensioners can get their weekly allowance topped up to \u00a3218.15, or \u00a3332.95 as a couple, both of which are below the tax-free allowance threshold.<\/p>\n \u201cFurthermore, those still working part-time or receiving self-employed income might consider making additional contributions to a private pension to help with costs once they retire from work completely.\u201d<\/p>\n The Triple Lock is currently on track to be determined by the earnings growth element of 4.8 per cent (including bonuses). The CPI for September will be published on October 22 and is forecast to be 4 per cent.<\/p>\n Chancellor Rachel Reeves will confirm the annual uprating at the Autumn Budget on November 26. An uprating of 4.8 per cent on the current State Pension would see people receive the following amounts.<\/p>\n Full New State Pension<\/p>\n Full Basic State Pension<\/p>\n State Pension and tax<\/p>\n The latest figures from the Department for Work and Pensions<\/a> (DWP) show there are now 13 million people of State Pension age across the country. The current official age of retirement is 66 and set to rise to 67 between 2027 and 2028.<\/p>\n HM Revenue and Customs<\/a> (HMRC) data indicates that 8.7m pensioners are projected to pay income tax on their retirement income for 2025\/26. It marks an increase of around 420,000 compared to the previous year (2024\/25) and a rise of 1.85m from 10 years ago (2015\/16).<\/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![\"An](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2025\/11\/10_man-and-woman.jpg\")
The annual uprating will see the full New State Pension creep closer to the \u00a312,570 Personal Allowance threshold.(Image: Getty )State Pension uprating predictions for 2026\/27<\/p>\n\n
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