THE Chancellor is due to announce a bumper state pension increase in her Budget next week.
The Treasury has said up to 13million pensioners will see their state pension increase faster than inflation next April.
Rachel Reeves is expected to confirm the boost in her Budget on Wednesday, November 26.
The amount pensioners get from the state rises every year in order to keep up with the cost of things like food and household bills.
The boost is due to the triple lock policy, which sees the state pension rise based on whichever is highest out of September inflation, average earnings growth between May and July, or 2.5%.
Inflation remained at 3.8% in September the same as it was in July and August .
This was lower than the earnings growth figure of 4.8%, meaning that pensions are expected to rise by this level from April next year.
The rate of the full new state pension is now expected to increase to just over £240 a week.
Taking the triple lock into account, it means the new state pension is expected to increase to £241.30 a week. This is up from its current rate of £230.25 a week.
It means pensioners could see their total yearly payment rise to £12,534.60.
It marks an increase worth over £550 a year, which is an extra £120 compared to what it would have been if it had been uprated only by inflation.
The full basic state pension is also expected to rise by around an extra £440 a year.
Chancellor of the Exchequer Rachel Reeves said: “Whether it’s our commitment to the Triple Lock or to rebuilding our NHS to cut waiting lists, we’re supporting pensioners to give them the security in retirement they deserve.
“At the Budget this week I will set out how we will take the fair choices to deliver on the country’s priorities to cut NHS waiting lists, cut national debt and cut the cost of living.”
While it will come as welcome news for retirees, it also means millions could be forced into paying tax on their state pension.
The personal allowance threshold, which is the amount you can earn before you start paying tax, is currently £12,570.
The rise in April could leave full state pensioners just £22 short of the threshold.
It means that millions could be forced to pay income tax on their pension when it rises again in the 2027/28 tax year.
Many more pensioners will also be dragged into paying tax on their savings from April 2026, if they have other savings on top of their state pension, such as a private pension.
How much state pension will I actually get?
The amount of new state pension you receive depends on your National Insurance (NI) record throughout your adult life.
If you have made at least 35 years of qualifying NI contributions, you may qualify for the maximum amount, outlined above.
The same is true if you have received equivalent credits on your NI record for raising children or providing care.
If you don’t have 35 years, you may be able to top up your record by paying in voluntary NI contributions.
To get the full basic state pension you will need 30 years of NI contributions or credits.
To get any state pension at all, you will need at least 10 years on your NI record.
How does the state pension work?
AT the moment the current state pension is paid to both men and women from age 66 – but it’s due to rise to 67 by 2028 and 68 by 2046.
The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age.
But not everyone gets the same amount, and you are awarded depending on your National Insurance record.
For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings.
The new state pension is based on people’s National Insurance records.
Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension.
You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit.
If you have gaps, you can top up your record by paying in voluntary National Insurance contributions.
To get the old, full basic state pension, you will need 30 years of contributions or credits.
You will need at least 10 years on your NI record to get any state pension.
