UK Pensions & Economy — Key Updates (Sep 2025)

 

🇬🇧 UK Pensions & Economy — Key Updates (Sep 2025)

1. Expected Pension Increase of ~4.7% from April 2026
   Because of the “triple lock” system (which means pensions rise by the highest of: inflation, average earnings growth, or 2.5%), UK state pensions are forecast to increase by 4.7% next April. New wage growth (for the May-July period) has outstripped inflation, making earnings growth the determining factor. The Guardian+5Sky News+5MoneySavingExpert.com+5

2. New & Old Pension Rates

   • For those on the new State Pension (for people reaching pension age from April 2016 onward): weekly payments are likely to increase from about £230.25 to £241.05. MoneySavingExpert.com+2Sky News+2

   • For those on the old/basic State Pension (people whose pension age was reached before April 2016): the increase would be from ~£176.45 to around £184.75 weekly. MoneySavingExpert.com+1

3. Impact on Annual Income & Tax

   • For many pensioners, especially those on the full new pension, this rise means an extra ~£560-£570/year from next April. MoneySavingExpert.com+2Bloomberg.com+2

   • A side-effect: the new pension total (~£12,534.60/year) will be above the personal allowance threshold (the amount you can earn/take before paying UK income tax) for the first time. This means more pensioners might need to pay income tax on their pension. MoneySavingExpert.com+1

4. Other Related Policy Changes & Pressures

   • Winter Fuel Payment: The UK government has restored payments for retirees with incomes under £35,000, reversing earlier plans to reduce eligibility. The Guardian+1

   • There’s a broader concern about fiscal pressure. The cost of keeping the triple lock sustainable is being debated; economists warn that rising pension costs plus other public spending could strain the government budget. The Guardian+2Trustnet+2

   • The labour market is cooling somewhat: unemployment is steady around 4.7%, wage growth is strong enough to trigger the pension uplift, but job vacancies and payrolled employment have shown signs of stress. Trustnet+3Sky News+3Financial Times+3