Updated for 2026/27 tax year
The full new state pension is £12,548 a year from April 2026. That is a 4.8% rise, driven by earnings growth under the triple lock.
Research from Vanguard puts the cumulative benefit of the triple lock in sharp focus: pensioners receiving the full new state pension are now £1,300 a year better off than they would be if the state pension had only ever risen with inflation since 2016.
That is a meaningful difference. But there is a catch. The personal allowance — the amount you can earn before paying income tax — has been frozen at £12,570 since 2021. The state pension now sits at £12,548. That leaves a gap of just £22 before income tax kicks in.
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How the triple lock works
The triple lock guarantees the state pension rises each April by whichever is highest:
- CPI inflation
- Average earnings growth
- 2.5%
It was introduced in 2011/12 to make sure pensioners received a meaningful annual increase rather than just keeping pace with prices. Before that, the state pension only rose with inflation.
For 2026/27, CPI inflation was 3.8% at the point it was measured in autumn 2025. Earnings growth came in at 4.8%, so earnings won — and the state pension increased by 4.8%.
How the triple lock has been applied since 2016
Since the new flat-rate state pension launched in 2016, the triple lock has been applied every year except one. In 2022/23, the earnings element was suspended because pandemic-related distortions had temporarily pushed wage growth above 8%, which the then-Government judged to be unrepresentative.
| Trigger | Times used since 2016 |
|---|---|
| Earnings growth | 6 |
| CPI inflation | 3 |
| 2.5% backstop | 2 |
The result of consistently applying the highest measure is that the state pension has grown faster than it would have under a simple inflation link — to the tune of £1,300 a year by 2026.
The personal allowance squeeze
The triple lock has pushed the state pension up. The personal allowance has not moved. That combination is creating a tax problem for a growing number of pensioners.
| Amount | |
|---|---|
| Full new state pension (2026/27) | £12,548 |
| Personal allowance (2026/27) | £12,570 |
| Buffer before income tax | £22 |
In 2021/22, pensioners could have £3,230 of other income — savings interest, a small private pension, part-time earnings — before hitting the income tax threshold. That buffer is now essentially gone.
The state pension has risen from 74% of the personal allowance in 2016 to 99.8% in 2026/27. HMRC estimates 2.1 million more pensioners paid income tax in 2025/26 as a result of the frozen allowance. That number will rise further in 2026/27.
The state pension is not taxed at source, but it counts as taxable income. If your total income — state pension plus anything else — exceeds £12,570, HMRC will collect tax on the excess, usually by adjusting the tax code on any private pension or employment income you receive.
Will the triple lock continue?
The current Government has committed to keeping the triple lock for the full parliament. It is popular with older voters, who have high turnout at elections.
Critics argue it is unaffordable over the long term and creates an imbalance between generations. Some financial experts also point out that if the state pension age has to rise to fund higher payouts, that falls hardest on lower-income workers who tend to have shorter life expectancy and fewer years to draw on what they have paid in.
For now, the triple lock remains in place. But the interaction with the frozen personal allowance is a growing policy tension that is unlikely to go away.
What this means for your retirement income
With the state pension consuming almost all of the personal allowance, how you manage other income sources matters more than it used to.
Draw only what you need from your pension
Taking more than you need from a private pension on top of the state pension will push your total income above £12,570 and trigger an income tax bill. You can usually withdraw up to 25% of your pension pot tax-free, and that does not have to happen all at once. Spreading withdrawals over several years can help keep your total income below key thresholds.
Shelter savings and investments in an ISA
With the personal allowance almost entirely used up by the state pension, any interest or investment returns held outside a tax wrapper will be taxable. Moving cash savings and investments into an ISA means future growth and withdrawals stay outside income tax entirely.
Think about the order you draw income
If you have multiple sources — cash savings, a general investment account, an ISA, and a pension — drawing down taxable accounts first and leaving ISAs and pensions to grow for longer is usually the most tax-efficient sequence.
Plan as a couple
If you are in a couple, you each have your own personal allowance, ISA allowance, and capital gains tax allowance. Transferring assets between spouses or civil partners to make use of a lower-earning partner's allowances can meaningfully reduce your combined tax bill.
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How much is the state pension in 2026/27?
The full new state pension is £12,548 a year (£241.30 a week) from April 2026. The old basic state pension, for those who retired before April 2016, is £184.90 a week.
Why is the state pension rising by 4.8% in 2026?
Under the triple lock, the state pension rises by the highest of CPI inflation, average earnings growth, or 2.5%. In autumn 2025, earnings growth was 4.8% — higher than CPI inflation at 3.8% — so earnings determined the 2026/27 increase.
Will I pay income tax on my state pension in 2026/27?
The state pension is not taxed at source, but it counts as taxable income. In 2026/27, the full new state pension of £12,548 is just £22 below the £12,570 personal allowance. Any other income on top — savings interest, a private pension, or part-time work — will likely trigger an income tax bill.
How do I qualify for the full new state pension?
You need 35 qualifying years of National Insurance contributions or credits to receive the full new state pension. You need at least 10 qualifying years to receive any amount. You can check your NI record and state pension forecast through your personal tax account on HMRC's website.
Does salary sacrifice help build a bigger pension before retirement?
Yes. Salary sacrifice pension contributions reduce your gross pay before income tax and National Insurance are calculated, so more of your money goes into your pension rather than to HMRC. Use the calculator to see exactly how much you could save.
This article is for general information only and is not financial or tax advice. Your personal circumstances will affect the tax you pay. Always consult a qualified financial adviser for advice tailored to your situation.