State pension payments are increasing 4.1% in April (Image: Getty)
State pensioners could pocket a £600 boost to their payments next year with a tax bill also on the way.
Experts have been sharing their predictions for how much the increase could be for April 2026, as payments are set to go up 4.1% in April thanks to the measure.
The ensures rates increase in line with the highest of the rise in average earnings, inflation or 2.5%.
Investment director Edward Maidment, from , said another sizeable pay increase could be on the way for claimants.
He explained: “Based on current forecasts, earnings growth is expected to moderate but still exceed inflation. If this trend continues, the increase in April 2025 could be as high as 4 to 5%, assuming wages rise at a similar pace to 2024.”
A 5% pay increase would mean the full new rising from 230.25 a week – the rate coming in from this April – up to £241.75 a week, an increase of £598 a year.
But this would also mean the full new would rise to £12,571, meaning it would become subject to income tax, as the payments would use up all of your standard £12,570 tax-free allowance, crossing over by just £1.
The full basic will pay £176.45 a week from this April, so a 5% pay boost next year would mean this would increase to £185.30 a week, or £9,635.60 a year.
Other experts have warned that for next year’s pay increase, and looking at current predictions this would mean a 3.7% boost to payments.
With the costs of the ever growing, many experts think the Government will have to re-think the policy before too long.
Mr Maidment warned: “The Government may also face pressure to reassess the sustainability of the , potentially adjusting the policy to mitigate long-term fiscal strain.”
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He spelled how the bill could continue to surge over the coming years: “Sustained high inflation would pile pressure on the , as state pensions would rise significantly each year, increasing fiscal costs.
“If earnings also grow strongly, the could rise at an even steeper rate, making long-term affordability a concern. This could lead to calls for reform, such as averaging increases over multiple years or introducing a ‘double lock’ that excludes the 2.5% minimum lock.
“For politicians, trying to balance fiscal sustainability without eroding pensioners’ real incomes could become a key policy battleground.”
Labour has vowed to keep the for the duration of this Parliament. Conservative shadow ministers also recently.
One policy change that will help ease the pressure of paying for the is that the age is increasing over the coming years.
Starting from next year, the access age will go up from the current 66 to 67, moving up in stages over a two-year period.
The age is also timetable to go up again from 67 to 68 between 2044 and 2046, although there have been reports that the timetable for this could be brought forward.