The state pension is set to rise in the new financial year, putting more cash into pensioners’ pockets.
As of April 2025, the state pension will increase by 4.1%, rising in line with the average wage increase in the last financial year.
However, concerns have been raised that the increase will be swallowed up by the income tax threshold freeze, which has been frozen at the current level of £12,570.
Here’s what we know about how much more money state pensioners will receive from April, as well as how the income tax threshold could affect them.
How much more money will I get?
For people who have reached state pension age after April 2016, the full new state pension will rise to £230.25 per week, up from £221.20. This is equivalent to £998.59 per month.
For those who reached state pension age before April 2016 and receive the basic state pension, their weekly payments will increase to £176.45, up from £169.50. This is equivalent to £762.78 per month.
The new pension system — for those who reached state pension age after April 2016 — was designed to simplify the rules and increase fairness for those who had gaps in their national insurance record, such as parents who took a career break to care for their children.
However, to achieve the full amount of the new state pension, a person must have 35 qualifying years of national insurance contributions, compared to 30 under the older system.
When will my state pension be paid?
Your state pension will be paid according to the last two digits of your national insurance number. It works out as follows:
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00 to 19: Benefits payable on Monday
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20 to 39: Benefits payable on Tuesday
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40 to 59: Benefits payable on Wednesday
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60 to 79: Benefits payable on Thursday
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80 to 99: Benefits payable on Friday
What is the state pension triple lock?
The state pension is guaranteed to rise because of the “triple lock“.
The guarantee, introduced in 2011, means the state pension increases year-on-year by the highest of three measures: inflation, the average increase in wages, or 2.5%.
In 2024, the state pension increased by 8.5%, in line with the previous September’s inflation figure.
This April, it will go up by 4.1%, matching wage growth in 2024.
While this has meant that state pensions have inflation-proofed, some campaigners and MPs have expressed concern, saying that the triple lock is not sustainable.
In 2023/24, pension payments cost the government an estimated £124.3 billion. In the 2024/25 fiscal year, this figure will rise to £138 billion.
And as this chart shows, it is set to rise to £172.2 billion by 2028-2029, making it the largest benefits spend by the government’s Department for Work and Pensions.
Will my state pension be taxed?
Under current rules, yes, your state pension can be taxed under certain circumstances. According to the government’s rules, the state pension is treated as income and is therefore subject to tax just like other forms of income.
Currently, the chancellor is not expected to address the income tax threshold, which has been frozen at the current level of £12,570 for the last few years since 2021.
Dennis Reed, the director of the campaign group for the over 60s Silver Voices, is handing in a petition at 10 Downing Street on Tuesday calling for the chancellor to address the income tax threshold freeze in the spring statement on Wednesday.
He told Yahoo News that “more and more pensioners are being sucked into the tax system for the first time each year”, and that with the current rise, those on a basic state pension could have it taxed.
Reed said: “Last year there were 660,000 more pensioners that started to have to pay tax. The reason they’re having to pay tax is because a lot of them have got small occupational or private pensions.
“While it may only be a few pounds a month, it’s sufficient to put you over the tax threshold because the tax threshold is not going up with inflation.”
He added: “This will affect more and more people with state pension entitlements, so on top of the basic pension, they might have a widow’s state pension, they might have an additional state pension because they were paying extra contributions through National Insurance, and all these people are now being brought into the system, so their existing state benefit entitlements are starting to be taxed.”
If the current threshold is not unfrozen, Reed warns that state pensioners will also be at risk of paying tax, even if they are not in receipt of anything other than a basic state pension.
“Unless this changes next year, people at the very top of the basic state pension will start coming into the system. If you have no other income apart from the state pension, you will still start having that state pension taxed,” Reed told Yahoo News.
“The longer that the frozen threshold remains, the more people will be sucked in who will only have the basic state pension, which doesn’t make any sense at all.
“It’s a benefit, benefits aren’t usually taxed. Why start taxing the state pension which you’ve paid for throughout your working life?
He added: “Working people are paying national insurance now for a state pension, just like we did. Why should you then have that taxed in the future? It’s a big issue.”
A Treasury spokesperson said: “We are committed to help our pensioners live their lives with dignity and respect, which is why we have frozen fuel duty and increased the state pension to leave pensioner couples up to £88 better off a month.
“Our commitment to the triple lock means millions will see their pension rise by up to £1,900 this parliament.”
