The formula will change from 2030

The UK state pension increase system known as the triple lock is set to lose its current structure from April 2030. Prime Minister Andy Burnham said the wage-growth link will be removed from the annual uprating formula to help fund the new national social care plan.

Burnham said the system will be protected during the current parliament, in line with Labour’s 2024 manifesto pledge, and that the change will come after that. Under the new model, the state pension will rise each year by at least inflation or 2.5%, while annual wage growth will no longer be the automatic factor.

How does the current system work?

Under the current rule, the state pension is increased every April by whichever is highest among three measures:

  • September's Consumer Prices Index (CPI) inflation for the previous year
  • Average total wage growth in the UK between May and July
  • The fixed minimum increase rate of 2.5%

Source data show that wage growth at the 3.9% level is likely to determine the April 2027 increase. That link has been at the center of cost debates around the system, which was introduced in 2010.

Impact on pensions and the budget

The state pension is paid every four weeks to people who have reached pension age and paid enough National Insurance contributions. For those who reached pension age after April 2016, the new full-rate pension currently stands at £241.30 a week, or £12,547.60 a year.

For those covered by the pre-April 2016 rules, the old basic state pension stands at £184.90 a week, or £9,614.80 a year. Based on current estimates, the April 2027 increase is expected to raise the new full-rate pension to £250.70 a week and the old basic pension to £192.10.

Why is the cost controversial?

The Office for Budget Responsibility (OBR) says the annual cost of the triple lock guarantee could reach £15.5 billion in 2030. The body also said total state pension spending could rise to £138 billion, accounting for around half of total welfare spending.

The Institute for Fiscal Studies (IFS) said the planned change would allow pensions to keep rising while making the system more sustainable. Even so, it warned that the reform alone may not be enough to fund universal social care in the next parliament.

Who will be affected, and what about tax and the age limit?

About 13 million people in the UK currently receive the state pension. The general rule for the full pension is 35 years of National Insurance contributions. People can make voluntary payments to cover missing years caused by time spent abroad or childcare, but since April 2025 only the previous six years can be topped up retrospectively.

If the expected April 2027 increase goes ahead, the new full-rate pension will exceed the £12,570 personal tax allowance threshold. That could mean an income tax bill of about £91 next year for people living only on the state pension, although the government says low-income pensioners will not pay income tax during this parliament.

Meanwhile, the state pension age is also rising. In the first phase, which began in April 2026, the age threshold is increasing from 66 to 67, and the Treasury is expected to save around £10 billion a year from that move by 2030.