A significant rise in the state pension is expected next April under what is known as the triple lock.
The increase, which could be as high as 8.5% is a contentious political issue which continues to cause debate.
The state pension rose in April 2023 by 10.1% - in line with the previous September's measure of inflation, since April, claimants have received £203.85 a week for the full, new flat-rate state pension (for those who reached state pension age after April 2016) £156.20 a week for the full, old basic state pension (for those who reached state pension age before April 2016).
Next April, the link to earnings under the triple lock is likely to see the state pension rise by 8.5%. That would mean, from April 2024, it would be worth £221.20 a week for the full, new flat-rate state pension and £169.50 a week for the full, old basic state pension.
What is the Triple Lock?
The triple lock was designed to ensure the value of the state pension was not overtaken by the increase in the cost of living or the working population's income. Under the triple lock system, the state pension increases each April in line with whichever of these three measures is highest:
1. Inflation, as measured by the Consumer Prices Index in the September of the previous year
2. The average increase in wages across the UK
When will you 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:
- 67 for those born on or after 5 April, 1960
- 68 between 2044 and 2046 for those born on or after 5 April, 1977
How are private pension allowances changing?
In the last budget, Chancellor Jeremy Hunt announced various changes to the lifetime pension allowance (the maximum amount of pension savings an individual can build up over their career without having to pay additional tax). The previous £1,073,100 limit, which was due to remain fixed until 2026 was removed.
The charge was removed from 6 April 2023, before the allowance is fully abolished from April 2024. The annual pension allowance is the maximum amount of money an individual can pay into their private pension each tax year without penalty. It went up from £40,000 to £60,000 on 6 April. If you go over the allowance, additional tax charges will apply. The chancellor said removing the lifetime pension allowance would would stop valuable senior professionals from retiring early.