State pension set for 3.9% hike next year under triple lock as economsist question costs

See more This is Money on Google - save us as a Preferred Source Updated: 03:11 EDT, 15 September 2026 Millions of pensioners will see their state pension rise next April under the triple lock, as economists warn costs have become unsustainable. The triple lock was introduced by David Cameron’s Conservative Government in the 2011/12 financial year. It means the state pension increases every year by the highest of inflation, average earnings growth or 2.5 per cent.Earnings figures published this morning show wage growth of 3.9 per cent, and unless inflation rises sharply from its current rate of 2.9 per cent, it will be used to calculate how much the state pension will increase from April.If confirmed, this would see the full new state pension rise from £12,547.60 to over £13,000, above the £12,570 at which you start to pay income tax, meaning millions of pensioners will have to pay tax on their state pension for the first time. Unsustainable: The triple lock has drawn criticism for its cost as millions more pensioners receive a boost to the state pension A boost to the state pension comes at a time when the affordability of the triple lock is already under scrutiny. Last week, the British Chambers of Commerce called for it to be replaced by an annual increase linked to inflation, with the resulting savings funding a cut to National Insurance (NI) bills for the under-25s. Pressure on public finances may force the Government to U-turn on its pledge to keep the triple lock as spending on the state pension increases by around £16billion. And current forecasts from the Office for Budget Responsibility suggest that the triple lock will push up state pension spending by £600 million per year in 2029–30. The Institute for Fiscal Studies said it is 'costly and very uncertain in the long run' and estimates that by 2050 it would cost around £20billion per year. John Greer, head of retirement policy at Quilter, said: 'The current system was never designed to run indefinitely. An ageing population, rising longevity and the ratchet effect embedded within the triple lock mean the cost of the State Pension will continue to grow faster than policymakers anticipated when the policy was introduced. 'Recent years have highlighted the problem. A sharp spike in inflation was followed by stronger wage growth, resulting in successive large increases that become permanently embedded in spending even after the original economic shock has passed.' Frozen thresholds sting for millions of pensioners A rise in the state pension will be welcome news for pensioners struggling with the cost of living crisis, but they may now have to pay income tax on a portion of their payments. It is a consequence of a freeze on income tax thresholds, which means people are dragged into higher tax brackets as their wages increase. The Government has previously committed to letting pensioners off paying income tax if their ‘only income is the full new or basic state pension without any increments’, but there has been no further detail.But the vast majority of pensioners won't qualify for this waiver – and leading pension experts warn that the Government's 'grossly unfair' solution will lumber retirees with a two-tier tax system. The measure promised for the rest of this parliament will benefit just one in 18 pensioners, according to a study by LCP conducted earlier this year. This creates a two-tier solution, where some are let off tax but others pay it.Plenty of pensioners who have built up any private work or personal pensions, or have other income that pushes them above this level are already taxpayers.So are state pensioners who retired before 2016 and earned sizeable top-ups through Serps or S2P during their working lives.Altogether, more than ten million pensioners are now paying income tax, setting a new record since thresholds were frozen five years ago, according to official figures that were released in July.SAVE MONEY, MAKE MONEYUp to £250 cashbackUp to £250 cashback2.5% cashback when investing at least £2004.61% cash Isa4.61% cash IsaTrading 212: 1.01% fixed 12-month bonus£3,000 cashback£3,000 cashback£100-£3,000 cashback when opening SippUp to £150 cashbackUp to £150 cashbackOpen a savings account with at least £5,000Welcome bonusWelcome bonusGet up to £200 when you invest £100Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence. Terms and conditions apply on all offers.