In April 2025, the state pension will increase by 4 percent; however, the "bizarre tax cliff edge" is still a possibility

The triple lock will raise the full new state pension by £473 to just under £12,000 annually

While the increase will put recipients closer to a "tax-cliff edge," pensioners will benefit from another huge boost to their state pension next month.

In accordance with the triple lock, the state pension is increased each April by the highest of two points five percent, average UK earnings growth, or inflation.

While the wage earnings growth in the three months leading up to July was 4 points per cent, the September measure of inflation, which was 1 point seven percent, is used.

This implies that at the beginning of April, the state pension will increase by 4.1 percent. The weekly full state pension will rise from 221.20 to 230.30, or 11,975 per year.

The "old" state pension, also referred to as the basic state pension, will rise from 169.50 per week (8,814 per year) to 176.45 (9,175).

Aegon's pensions director, Steven Cameron, points out that the triple lock increase for the state pension is also higher than the current inflation rate, which was 2.08 percent for February 2025.

He declared, "The chancellor will be pleased with today's decrease in the inflation figure from 3 percent to 2 point 8 percent, which coincided with the Spring Statement."

"Pensioners are on track to receive an increase above inflation with these figures, which come just days before they receive a 4 percent increase to their state pension.

"There is a significant lag between the increase's establishment and its implementation in April of the following year. However, the increase this year keeps the purchasing power of pensioners above the most recent inflation figure.

Does my state pension have to be taxed?

The tax-free personal allowance (12,570) will be slightly higher than the full new state pension of £11,975 annually, which will take effect next month.

For more than three years, tax thresholds have been frozen, and they aren't anticipated to rise until 2028 at the latest.

According to the most recent projections from the Office for Budget Responsibility (OBR), which were made public with the Spring Statement, the state pension will increase by 41.6 percent under the triple lock next year, reaching 12,569.85 per year, which is only 15 pence less than the tax-free allowance.

Quilter's head of retirement policy, Jon Greer, remarks: "The OBR's most recent projections show that we are rapidly approaching an odd tax cliff edge for retirees. The triple lock is expected to raise the state pension by 4 points and 6 percent in April 2026, bringing it just below the frozen personal allowance.

The mechanism that was supposed to shield pensioners from poverty is now colliding with fiscal drag, he continues. Due to high inflation and earnings figures, the triple lock has resulted in some notable increases in the state pension; however, the government has failed to raise tax thresholds in tandem.

In 2027 - 2028, the OBR projects that the state pension will increase by 2.5 percent, bringing the total new state pension to 12,885 point 50 annually, surpassing the personal allowance by 315 point 50.

Some retirees already pay taxes on their state pension income because of the intricacies of the state pension system.

According to estimates from the pension consultancy LCP, approximately 2.5 million pensioners pay taxes on their state pension, and over one in five pensioners have state pensions that exceed their personal allowance.

The majority of pensioners also receive additional income in addition to their state pension. They might have a self-invested personal pension (SIPP), a private pension, or a pension from their employer.

This indicates that some pensioners already pay a sizable amount in income tax, and the effects of fiscal drag are making the burden even greater.

According to the most recent HMRC data, approximately 8.51 million pensioners will be subject to income tax in the 2024 - 2025 fiscal year. That is an increase of 660,000 over 2023 - 2024.

Meanwhile, the expansion of the state pension may force people who currently pay income tax on their pensionalbeit at the basic rateinto a higher tax bracket.

The Conservative Party's "triple lock plus" election pledge included raising the personal allowance for pensioners in the run-up to the general election. When Labour won the general election, though, this was relegated to the policy trash can.

What is my expected state pension amount for this year?

At the moment, the entire new state pension is worth £221.20 per week, or £11,502 annually. Both men and women born after 1951 and 1953 are eligible for the new state pension.

The yearly payment will increase by 4.1 percent the following month, reaching 11,975. This year, the increase will take effect on Monday, April 7, since the annual state pension change takes place on the Monday after April 1.

The new state pension is not given to everyone, though. Others get less.

Also, pre-2016 retirees will receive a 4 percent raise. This implies a smaller increase of 361 per year for those receiving the full basic state pension.

The amount you receive is determined by your age (i.e., whether you receive the basic or new state pension) and the number of years you have made National Insurance contributions (NICs).

While 30 years of NICs were required for the previous pension, 35 years are required for the new state pension in order to receive the full amount, and at least 10 years are required to be eligible.

The government can provide you with a state pension forecast that shows how much you could receive.

Does the triple lock result in a rise in everyone's state pension?

The triple lock does not protect everyone's state pension.

Cameron points out: "Under a little-known rule, individuals who have paid additional National Insurance contributions to top up their state pension or who are entitled to an earnings-related pension on top of their basic state pension under the pre-April 2016 rules will see these elements increased in line with last September's rate of inflation at just 1.7 percent.

The triple lock on their UK state pension is also not available to foreign pensioners who reside in specific nations, such as Australia, Canada, and New Zealand.

This is covered in greater detail in Who Will Miss Out on the State Pension Triple Lock?