State Pension Increase Explained
Good news first – the government have proposed raising the State Pension in April 2026. For those who receive the New Full State Pension (introduced after April 2016), the payment will increase from £221.20 to £230.05 per week. This means you will receive an extra £460 per year, a 4% increase.
If you are on the Old Basic State Pension (for those who reached State Pension age before April 2016), the payment will rise from £169.50 to £176.30 per week. This gives you an additional £353.60 per year, also a 4% increase.
These increases are a result of the government’s 2010 “Triple Lock” promise, which states that pensions will rise each year by the highest of; inflation, wage growth or 2.5%.
Please note, this information is subject to change based on future government updates or policy changes.
Removal of the Winter Fuel Allowance
The Winter Fuel Allowance which has provided a yearly payment of between £200 and £300 to pensioners to help with heating costs during the colder months, since 1997. However, this year, most pensioners will no longer automatically receive this payment, as it will now be means-tested.
Only those on low incomes, who also claim certain benefits, will remain eligible. This change may leave many pensioners feeling the pinch, especially with energy costs still high.
How Much Better Off Are You?
On paper, the State Pension increase sounds promising. However, when we factor in the removal of the Winter Fuel Allowance, the financial benefits are less clear. Let’s look at the numbers.
If you receive the New Full State Pension, the £460 annual increase will be subject to income tax. For basic-rate taxpayers, this means the net increase after tax is £368.
Now, compare this to the loss of the Winter Fuel Allowance:
- If you previously received £200 in Winter Fuel Allowance, you will now be £168 better off after tax.
- If you previously received £300, you will now be only £68 better off.
These figures show that while the pension increase helps, it doesn’t entirely make up for the loss of the Winter Fuel Allowance for many.
Please note, this information is subject to change based on future government updates or policy changes.
What To Do Next
If you are worried about these changes, you should check your eligibility for other benefits. Many pensioners are eligible for Pension Credit, which could unlock additional support. The government has urged people to apply, and claims for Pension Credit have already increases by 115% in the last few months.
You should also keep an eye on future announcements, especially with further budget changes expected later in the year. Staying informed will help you make the best financial decisions.
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