The state pension will pay out more than £1k a month for the first time in April (Image: Getty)
The is due to rise to £230.25 a week in April from £221.20. This means state pensioners will get £11,973 a year,
Richard Smith, an independent consultant who is working on the government’s pensions dashboard project explained that in some months savers would see their total £1,000 or more, because the is paid every four weeks rather than each calendar month.
This means state pensioners will get over £1,000 in April because it is a short month.
Smith said many pensioners were unaware that the was increasing by 4.1% in the coming financial year.
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Smith was speaking to pensions industry investors and providers at the Pensions and Lifetime Savings Association’s annual investment conference in Edinburgh.
Many will look forward to their next increase, which comes through in April. It will be based on earnings, which rose by 4.1% during the period.
This will lift the maximum from today’s £11,502 to £11,973 a year.
A single person needs £14,400 a year to enjoy a minimum living standard in retirement, according to the Pensions and Lifetime Savings Association. A moderate standard requires £31,300.
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A freezing of the personal tax threshold at £12,570 also means that from next year, state pensioners will be forced to pay from next year.
This is reportedly set to start happening from April 2026, as Deutsche Bank forecasts suggest the will increase to £12,631 next year.
It is predicted around nine million pensioners will be subject to income tax on their in the near future.
“As of right now, our projection for AWE in the three months to July sits at 5.5% year on year,” Sanjay Raja, Deutsche Bank’s chief UK economist, said.
The bank predicts the will spark a 5.5% rise in payments in 2026, driven by projected growth in average weekly earnings, .
Not increasing the value of tax thresholds, i.e. freezing them, increases people’s taxable income without actually increasing tax rates.
This is known as fiscal drag, as more taxpayers are “dragged” into paying tax, or into paying a levy at a higher rate.