State pension to rise by £460 near year – but experts warn of catch amid Winter Fuel Payment row

The state pension rise will be welcome news for older people – but experts say other factors could cancel out some of the increase

Wage figures suggest the state pension increase will be £460 (Kirsty O’Connor/PA) (PA Archive)

The full UK state pension is expected to rise £460 next year, boosting the incomes for millions of pensioners. Latest wage data suggests that an increase of four percent will be applied from April.

This is in line with the government’s commitment to the triple lock – reaffirmed by Labour – that ensures the state pension rises by one of three measures every year. This will be either the highest out of inflation, the average wage increase, or 2.5 percent.

Typically taken from the earnings figures for the three months to July, the four percent wage growth is far higher than inflation, which dropped to the Bank of England’s two per cent target in June for the first time in nearly three years.

The Government faces a potential backbench rebellion over plans to restrict the winter fuel payment to only the poorest pensioners (Peter Byrne/PA) (PA Archive)

Following the rise, the full, new flat-rate state pension will rise to £230.05 a week, or £11,962.60 a year. This is an increase of £460.

The full, old basic state pension will rise to £176.30 a week, or £9,167.60 a year. This is an increase of £353.60.

However, experts say the increase will also drag an estimated 300,000 pensioners into paying more tax on their incomes. This is due to the personal allowance freeze which means the income level at which all people must start paying tax has stayed at £12,570 since 2021.

This means that as more pensioners begin to see income over this amount, more will begin paying tax on that income.

Steve Webb, partner at pension consultants LCP said: “With tax thresholds frozen yet again in April 2025, even a relatively modest pension rise could drag more than 300,000 more pensioners into the tax net for the first time.

“Roughly two thirds of all pensioners now pay income tax, typically at the basic rate, so for most people a rise of £400 next April will only be worth £320 once income tax has been deducted,” he told The Telegraph.

Most pensioners will also see a £200 or £300 deduction from their finances this year, as the Winter Fuel Payment is scrapped for all but those on the lowest incomes. Despite criticism against the move, Labour ministers have remained steadfast on the measure which campaigners have said is likely to also hit vulnerable older people if not reworked.

Lily Megson, Policy Director at My Pension Expert said: “With the state pension set to rise in line with wage growth, this increase will offer some additional support for retirees who have struggled under huge financial strain in recent years.

“However, while the triple lock remains an important safeguarding measure, a rise alone won’t solve the broader financial challenges facing pensioners.

“The cost-of-living crisis has taken its toll, and the decision to cut the winter fuel payment for most households will be particularly harsh, especially with energy prices remaining high. Many pensioners will face a gruelling winter and so, while the state pension increase is welcome, it will fall short of fully protecting pensioners from rising costs.”