Government pledges tax shield as state pension rises 3.9%
The state pension is set to rise by 3.9% from April, but the government says those solely reliant on it will not pay income tax.
The Full Story
A plain summary built from the channels that reported this story.
The state pension is expected to increase by 3.9% from next April, a move that would take the full new state pension above the income tax threshold for the first time. The rise follows the release of wage growth figures showing average earnings including bonuses rose by 3.9%, the highest of the three measures used under the triple lock policy.
Under the triple lock, the state pension rises in line with whichever is highest: average wage growth, inflation, or 2.5%. With wage growth at 3.9%, the full new state pension for those retiring after April 2016 is likely to rise from about £12,548 to just over £13,000 a year, an increase of nearly £500. Those on the old basic state pension, for people who started claiming before April 2016, would see their payments rise by about £374 to nearly £9,989 a year.
The prospect of the state pension breaching the personal tax allowance of £12,570 caused concern, but the government moved quickly to clarify its position. Downing Street said it would honour a commitment made by the former chancellor Rachel Reeves, meaning pensioners whose only income is the state pension will not pay tax on it, even if the payments exceed the threshold. The exact details of how the exemption will work, including what counts as "just exceeding" the allowance, are expected to be set out in next month's budget.
The confirmation came after a morning of confusion, with ministers initially appearing to leave the question open. One political correspondent reported that the Prime Minister's spokesperson had confirmed the pledge, but noted that the policy could create an inconsistency: low-paid workers on similar incomes would still be subject to income tax, which some commentators described as unfair.
The announcement has reignited a broader debate about the affordability of the triple lock. The Institute for Fiscal Studies estimates that total state pension spending this financial year is around £154 billion, similar in magnitude to the combined budgets of the Ministry of Defence and the Department for Education. The triple lock component alone is said to be £16 billion per year higher than it would have been without the policy. Economists have warned the policy is unsustainable in the long term, particularly as the population ages and the ratio of workers to pensioners falls.
Some former Conservative ministers, including Jeremy Hunt and Michael Gove, have argued the triple lock should be scrapped and replaced with a less generous system. The Labour government has committed to keeping the policy for this Parliament, but questions remain about what happens after the next election. The Green Party has already proposed moving to a double lock, while the Liberal Democrats have suggested a review.
Pensioner charities have defended the policy, pointing out that it has lifted many older people out of poverty. But younger workers are increasingly vocal about what they see as an unfair generational divide. Official figures released on the same day showed youth unemployment rising to 16.4%, its highest level since 2014, adding to criticism that the triple lock amplifies inequality between generations.
The rise in the state pension is not yet final. The wage growth figures could be revised, and the government still needs to formally confirm the increase. The final decision is expected at the autumn budget, alongside other measures affecting pensioners and taxpayers.
On screen
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Key Claims
Claims reported during this story's coverage, mapped by channel. Ordered by how many channels carried each claim.
| Claim | Channel 5 | BBC One | BBC Two | Channel 4 | ITV |
|---|---|---|---|---|---|
| The state pension is set to rise by 3.9% next year, increasing the full pension by nearly £500 a year to around £13,000. | · | ||||
| The Prime Minister's spokesperson confirmed that pensioners who just exceed the allowance will not have to pay tax this Parliament. | · | · | |||
| The state pension costs over £150 billion this year. | · | · | |||
| The cost of the triple lock policy was reported, with this year's rise estimated at about £600 million a year and the IFS saying 15 years of rises have cost more than £15 billion a year. | · | · | · | ||
| The triple lock policy guarantees the state pension increases by the highest of wage growth, inflation, or 2.5%. | · | · | · | ||
| Economists have warned about the cost of the triple lock policy ahead of the budget. | · | · | · | · | |
| People on the full state pension are set to breach the personal tax allowance for the first time. | · | · | · | · | |
| State pension spending as a share of GDP increased from 4.3% in 2010 to 4.9% currently. | · | · | · | · | |
| The government is committed to the triple lock policy. | · | · | · | · | |
| The pension rise is not final and requires government approval. | · | · | · | · |
Channel Perspectives
What each channel focused on, with key quotes.
Channel 4 focused on the economic and political context of the pension rise, linking it to wider pressures on the Chancellor, including oil prices and youth unemployment. It highlighted the intergenerational inequality angle and the political difficulty of reforming the triple lock.
- “It's caused this stir because it's ticked them over into beyond the tax-free allowance, and it's created a bit of an outcry.”
- “Most economists would say the Triple Lock isn't affordable anymore, but most politicians would tell you changing it would be career suicide.”
- “Young people lose and lose.”
Channel 5 gave a practical, consumer-focused angle, bringing in a personal finance expert to break down what the rise means for pensioners' take-home pay. It explained the tax calculation in detail and noted the government's pledge not to pursue small tax amounts.
- “It's a jump of £488 and that's because pensions are protected by something called the triple lock.”
- “However, the current government has said they are not going to go knocking on all of the state pension stores asking them for £93.”
- “It costs £154 billion to pay for the state pension and a lot of pensioners are not necessarily understanding that the pension, the state pension is paid out of national insurance and other taxes that we pay today.”
BBC ONE West provided the most detailed analysis of the triple lock's mechanics and cost, with economics editor Faisal Islam reporting on the IFS figures and the wider affordability debate. It also confirmed the government's tax exemption commitment.
- “The triple lock has been successful at lowering pensioner poverty, but also costs significantly more than expectations when it was set up and there is a consensus amongst economists that it's unsustainable in the decades to come.”
- “The government clarified that those solely on the state pension would not have to pay any tax on it, even if it rises above the income tax threshold.”
- “The cost of this year's move alone is about £600 million a year, according to economists.”
BBC TWO focused on the political and generational fairness debate, featuring discussion with politicians about whether the triple lock is sustainable. It quoted former Conservative ministers who now say it is unaffordable and unfair to younger generations.
- “I don't think it's defensible. We do need to think about those who are hit hardest and those who are hit hardest. Those who are suffering most, particularly from the prospect of unemployment at the moment, are younger people.”
- “The triple lock component of that is £131bn.”
- “Spending on the state pension is now £16bn per year higher than it would have been in the absence of the triple lock.”
ITV1 led with the breaking news of the government's confirmation that pensioners just above the tax threshold would not pay tax. It highlighted the potential unfairness compared with low-paid workers and stressed the budget's role in clarifying details.
- “The Prime Minister's spokesperson has just confirmed that in line with Rachel Reeves' commitment made at Budget last year, pensioners who just exceed the allowance will not have to pay tax in this Parliament.”
- “But today's commitment that older people won't have to pay tax on their state pension will put them at odds for example with low paid workers who will still have to pay tax on the same amount and that I think will be seen by many as unfair.”
- “What we don't know is what just exceeding the allowance exactly looks like and how all of this will work.”
Broadcast Timeline
News broadcasts tracked for this story, in time order.