State Pension pay to rise £460 next year

The latest increase would take State Pension pay close to the £12,000 mark, but new research suggests retirees need at least £17,200 for a basic living standard.

The value of the State Pension is almost certain to rise by £460 in the 2025/2026 tax year.

It means the full New State Pension will rise to £230.05 a week, or £11,963 a year, while those who retired before 2016 will get £9,168 on the old State Pension.

The increase will work out to little more than half the £900 increase seen in April of this year.

How the 2025/26 State Pension rise is worked out

The rate at which the State Pension increases is calculated using the triple lock system.

This means the Government chooses the highest out of three separate figures, namely: wage growth in the three months to July, CPI inflation in September and 2.5%.

Figures out today have confirmed that wage growth to July came in at 4%.

While the inflation figures will only be revealed in October, it seems extremely unlikely it will rise above the 4% mark, given it currently stands at 2.2%.

So wage figures look set to be used, which will mean a £460 hike as mentioned above.

State Pension 'already £5k short of decent standard'

While any increase is obviously welcome, the relative value of the State Pension was put into stark focus by a recent report from the Joseph Rowntree Foundation.

It found that a single pensioner living alone would need £17,200 a year just to meet their basic needs. 

That means, even after next year's increase is factored in, the State Pension will still fall more than £5,000 short of this target.

Many financial hurdles to come for older Brits

As if things weren't bad enough, pensioners will face a number of financial difficulties over the Winter. 

The headline change is the Government's decision to scrap the Winter Fuel Allowance for millions of retirees, meaning a loss of up to £300 compared to previous Winters.

What's more, annual energy bills are set to rise £149 from October as a result of changes to Ofgem's Energy Price Cap.

Throw in the fact that Cost of Living Payments will no longer be made this Winter and possible tax hikes coming in next month's Budget, and it's clear many retirees might actually be worse off despite next April's expected £460 State Pension pay rise.