The State Pension has risen significantly over the years, and will increase again by 8.5% in April 2024, following a record-breaking increase last April.
The 10.1% increase in the 2023/24 tax year was the largest annual rise in the State Pension since the government introduced the triple lock in 2011. Prior to this, the largest rise was 5.2% in 2012/13, which was also a result of inflation reaching this level.
Under the triple lock, the State Pension is guaranteed to rise by the highest of September’s inflation figure, earnings growth, or 2.5%, so in April 2024 it will rise by 8.5% in line with earnings. You can read more in our guide What is the pension triple lock?
If you’re considering getting professional financial advice, Unbiased is offering Rest Less members a free pension review. It’s a chance to have a qualified independent financial advisor (IFA) take a look at your pension arrangements and give an unbiased assessment of your retirement savings.
The review is free and without obligation, but if the IFA feels you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.
Here’s our rundown of how much the State Pension has risen over the years, and whether it’s expected to continue rising in line with the triple lock.
Contents
How much is the full State Pension?
The full rate of the new State Pension is £10,600 a year in 2023/24, or £203.85 a week. However, the amount you receive could be different, depending on whether you were contracted out of the additional State Pension before 2016, and the number of National Insurance qualifying years you have. You typically need a total of 30 ‘qualifying years’ of NI to receive the full State Pension. Find out more in our guides How the State Pension works and State Second Pension and SERPS explained.
How much has the State Pension gone up by?
The State Pension has risen in line with the triple lock for more than a decade, aside from the 2022/23 tax year when the triple lock was temporarily suspended. This was to avoid the government having to raise payments by 8% in the wake of the pandemic, when earnings were artificially inflated by the furlough scheme.
However, there have been several hefty State Pension rises since then. Annual increases are not usually as great as the latest rises, as you can see from the table below, which details all the increases over the years, and which figure they were based on that particular year.
State Pension rises since 2012
The table includes the increases for both types of State Pension: the new State Pension and the basic State pension since 2012. Whether you receive the new State Pension or the basic State Pension depends on when you were born. For example, if you’re a man and were born on or after 6 April 1951, or if you’re a woman born on or after 6 April 1953 new State Pension rules will apply to you. If you’re a man and were born before 6 April 1951, or if you’re a woman born before 6 April 1953, you’ll likely be claiming the basic State Pension already.
Tax Year | Rise Based On | Full State Pension per week (New State Pension) | Full State Pension per week (Basic State Pension) |
2012/13 | CPI (5.2%) | N/A | £107.45 |
2013/14 | Minimum increase (2.5%) | N/A | £110.15 |
2014/15 | CPI (2.7%) | N/A | £113.10 |
2015/16 | Minimum increase (2.5%) | N/A | £115.95 |
2016/17 | Earnings (2.9%) | £155.65 | £119.30 |
2017/18 | Minimum increase (2.5%) | £159.55 | £122.30 |
2018/19 | CPI (3%) | £164.35 | £125.95 |
2019/20 | Earnings (2.6%) | £168.60 | £129.20 |
2020/21 | Earnings (3.9%) | £175.20 | £134.25 |
2021/22 | Minimum increase (2.5%) | £179.60 | £137.60 |
2022/23 | Triple lock suspended – CPI (3.1%) | £185.15 | £141.85 |
2023/24 | CPI (10.1%) | £203.85 | £156.20 |
2024/25 | Earnings (8.5%) | £221.20 | £169.50 |
How much will the State Pension increase by in April 2024?
The full State Pension will rise from £10,600 in the 2023/24 tax year (£203.85 a week) to £11,502 a year (£221.20 a week) from April 2024. However, as mentioned, the amount you’ll personally receive is based on your National Insurance Contribution (NICs) record.
Rising wages outstripped inflation over the past year, with annual wage growth at 8.5% and inflation in September at 6.7% (and having fallen to 4% since). The Chancellor Jeremy Hunt confirmed in the Autumn Statement that this means that the State Pension will increase by 8.5% in April 2023, in line with the triple lock.
At present, both men and women born after 5 October 1954 will receive their State Pension at age 66. The State Pension age is set to rise in the coming years, to age 67 between 2026 and 2028, and to 68 between 2037 and 2039.
How much will the State pension go up by in the future?
The State Pension is expected to increase over time so that, as far as possible, it keeps pace with rising living costs. There have been times, however, such as in the 1970s and recent years, when inflation skyrocketed and placed extreme pressure on household finances, and particularly pension incomes.
Becky O’Connor, director of public affairs at PensionBee, said: “It’s hard to imagine a political party being brave enough to water the triple lock down and risk losing the votes of the more than 12 million pensioners who receive it. However, there would be justification to review the way rises are made at the time when there is consensus that the triple lock has done its job. When it was introduced, this job was to bring pensioners out of poverty and to bring the average State Pension income to a decent level.
“The relative generosity of the State Pension has varied over time. Now, as a result of the triple lock, it is at a relatively generous level, compared with historical standards. However, if you compare the UK State Pension with other European countries, it doesn’t come out quite so well. So there’s still plenty to debate on whether it’s actually high enough.
“It is certainly very difficult to sustain rises, with an ageing population and fewer people working supporting more people on pensions. So even if we decide it isn’t high enough, the question becomes more ‘is it affordable?’ rather than ‘is it high enough?’”
It is impossible to predict with any certainty what further changes lie ahead to the State Pension for those yet to reach retirement, which is why it’s so vitally important to try to make your own provision for retirement as well, usually either by paying into a workplace or private pension.
How should you factor the State Pension into your retirement planning?
The State Pension forms the building block of most people’s retirement income, but you’ll need to have access to additional income if you want a comfortable standard of living. According to the Pensions and Lifetime Savings Association’s (PLSA) latest Retirement Living Standards research, to have a ‘moderate’ living standard in retirement, you’ll need an income of about £43,100 before tax if you’re a couple, or £31,300 if you’re single. Read more in our guides How the State Pension affects the income you need in retirement and Can you afford to retire?
If you’ve a defined contribution pension, you have a wide range of options when it comes to how you create additional income when you retire. You could, for example, use some or all of your pension savings to buy an annuity, which is a financial product that guarantees you an income for life in retirement. Alternatively, you may choose a flexible drawdown plan, which enables you to draw an income from your pot when needed while leaving your savings invested. Find out more in our guide Your pension options at retirement.
Annuities have become increasingly popular as rates have climbed in recent years. You buy an annuity from an insurance company with your pension savings in return for handing over some, or all of your pension savings. You’ll usually be paid a guaranteed income for life, or for a fixed term, from an annuity. However, the major disadvantage of an annuity is that this income will typically die with you, so unlike a pension used for drawdown, cannot be passed onto loved ones. Find out more in our article What happens to my pension when I die?
If you decide to use drawdown to manage your retirement income, you’ll leave your pension invested and take an income as and when you need it. The idea is that, hopefully, over the long term, you’ll continue to benefit from any growth in the value of your investments, whilst also receiving an income. Whether you choose an annuity or drawdown, or a combination of the two, you’ll usually be able to take 25% of your pot tax-free either as a lump sum, or spread across a number of years. Learn more about this in our guide Should I take a tax-free lump sum from my pension?
Seeking advice on your pension
You can get more information on your State Pension, how this works and how to claim it from the Pension Service.
If you’re not sure whether you’re saving enough to supplement your State Pension in retirement, or you want specific recommendations, you might want to speak to an independent financial advisor who can suggest the best course of action for you based on your individual circumstances.
If you’re considering getting professional financial advice, Unbiased is offering Rest Less members a free pension review. It’s a chance to have a qualified independent financial advisor (IFA) take a look at your pension arrangements and give an unbiased assessment of your retirement savings.
The review is free and without obligation, but if the IFA feels you’d benefit from paid financial advice, they’ll go over how that works and the charges involved.
Rest Less Money is on Instagram. Check out our account and give us a follow @rest_less_uk_money for all the latest Money News, updated daily.