UK state pension increase of £490 for new State Pension recipients, Digi Mart USA News (United Kingdom): The Department for Work and Pensions (DWP) has announced an increase of around £490 a year for recipients of the new full State Pension. The change applies to men born after 1951 and women born after 1953, meaning those affected will be aged 76 and below by next year, according to a report from Birmingham Live.
The announcement follows Chancellor John Healey’s Autumn Budget, delivered last week. Pat McFadden, a Labour Party cabinet member, said he had concluded the statutory annual review of State Pension and benefit rates under the Social Security Administration Act 1992.
The new rates will apply in the 2027-28 tax year and will mainly take effect from 12 April 2027.
McFadden said the basic and full rates of the new State Pension will rise by 3.9%, in line with the increase in average weekly earnings in the year to May-July 2026. He said this delivers on the government’s Triple Lock commitment, which raises pensions in line with the highest of growth in prices, growth in earnings or 2.5%.
He added that the full annual rate of the new State Pension will rise by around £490, while the full annual rate of the basic State Pension will rise by around £375.
The triple lock guarantee remains in place until 2030, after which adjustments will be made. Tom Stevenson of Fidelity International said the Budget was not one people would remember for long, adding that financial markets had given the Chancellor a relatively easy ride.
He said the Chancellor was fiscally credible but that longer-term challenges remain, including high borrowing costs, limited room for manoeuvre and a disappointing growth outlook.
Patrick Thomson, head of research analysis and policy at the Standard Life Centre for the Future of Retirement, said the full new State Pension will rise to £13,036.40, overtaking the frozen £12,570 Personal Allowance. To address this, the government has announced a new Pensions Tax Allowance so that low-income pensioners are not pulled into paying tax simply because their payments have increased.
Stevenson said those with total income between £12,570 and £13,037 will receive the full Pensions Tax Allowance, worth up to £94 in the first year. The allowance will then taper away at £1 for every £3 of additional income, providing some support up to an income of £13,319.
The policy is estimated to cost £45 million in the first year. Thomson noted that with the State Pension continuing to rise against a frozen Personal Allowance, even relatively small differences in retirement income could lead to different tax outcomes.
