How a lot will my state pension enhance in 2025?

Millions of state pensioners are in line to receive a pay rise of over £460 next year, thanks to the “triple lock” policy.

Although the final figure will be confirmed by Work and Pensions Minister Liz Kendall before the Budget on October 30, the state pension is almost certain to increase by 4pc – the amount that average wages have increased by, according to figures from the Office for National Statistics. 

The full new state pension will hit nearly £12,000 for the first time ever, with the change taking effect on April 7 2025. The “basic” state pension, paid to those who reached the state pension age before 2016, is also set to rise by around £353 to £9,167 annually.

But this pay rise comes at a massive cost to the Government, and questions have been raised about whether it might be changed, or scrapped altogether. At a time of mounting political pressure to get public finances under control, the state pension triple lock has become a key area of debate. 

Here, Telegraph Money explains what the triple lock is, and how much pensioners will get from the state pension this year, covering the following:

• What is the state pension?
• How much will the state pension increase in 2025?
• What is the triple lock?
• What is the full state pension in 2024?
• What is the triple lock plus?
• Will the triple lock end?
• Is the policy really unsustainable?
• How can I qualify for the new full state pension?

What is the state pension?

The state pension is a regular government payment to support people throughout their retirement. It can only be claimed when you reach state pension age, which is currently 66 for men and women. However, this will start to gradually increase to 67 from 2026.

You also need to have enough qualifying years of National Insurance contributions.

How much will the state pension increase in 2025?

Should next year’s state pension increase follow today’s wage figures, retirees who receive the full new state pension will see their payments rise to £11,962.60 for the 2025-26 tax year, up from £11,502.40 in 2023-24. This is for those who reached state pension age after April 2016 and have 35 qualifying years of National Insurance contributions.

The basic state pension, paid to those who reached state pension age before April 2016, will rise to around £9,167 – an increase of £353.

What is the triple lock?

The triple lock policy was first introduced by the Coalition Government in its 2010 Budget, and came into force in 2011-12. 

It promises to increase the state pension every April in line with either the previous September’s Consumer Prices Index measure of inflation (CPI), wage growth or 2.5pc – whichever is higher. 

For 2025-26, the rise will almost certainly be in-line with wage growth, at 4pc, as it is likely to be higher than both inflation and 2.5pc.

For 2024-25, pensioners saw a bumper 8.5pc pay rise, the second largest ever, as the triple lock mirrored the increase in wages.

What is the full state pension in 2024?

Retirees who receive the full new state pension get £11,502.40 for the 2024-25 tax year, up from £10,600.20 in 2023-24.

Those on the basic state pension receive £8,814 for this year.

The table below shows how the triple lock has seen state pension payments increase since 2011-12.

What is the triple lock plus?

During the election, the Conservatives announced a “Triple Lock Plus” policy, which would have given pensioners further protection on their income by making sure the state pension never became taxable. This would have been achieved by increasing the personal allowance by the same amount as the triple lock. 

However, the Labour government has not adopted the policy. As a result, pensioners are facing a “retirement tax” on their state pension income within two years.

Will the triple lock end? 

While the triple lock rules are remaining for now, the policy is not written into law, so it can be changed in future. 

During the pandemic the Government broke the earnings link of the triple lock, and instead chose to uplift pensions in line with inflation at 3.1pc. This was because the pandemic furlough scheme and redundancies led to a freak 8.3pc jump in wage growth.

But even before then, the Government has long been aware of the pressure that the policy would face. Helen Morrissey, of the broker Hargreaves Lansdown, said: “In 2017, a government-backed review found that while the state pension was doing a great job at boosting pensioner income, there would come a point when it becomes intergenerationally unfair.” 

The state pension system is funded on a pay-as-you-go basis by taxes collected from today’s workers and businesses. Critics of the triple lock have suggested it is unfair that workers are footing the bill of such a large pay rise for retirees. 

The state pension is one of the Government’s most expensive policies, costing £125 billion in 2023-2024, according to the Office for Budget Responsibility (OBR). It accounts for almost half of total spending on benefits. 

However, Labour committed to maintaining the triple lock during the election and, now in government, has so far been reluctant to commit to any reform, especially as the policy helps curry favour with older voters. 

Is the policy really unsustainable? 

The state pension is one of the most expensive policies in Government. This makes it a big target for reform, especially as Britain’s official actuary has warned that the Government will soon spend more on the state pension and other benefits than it collects from National Insurance payments. 

Contrary to popular belief, there is no National Insurance “fund”. Pensions and other benefits are funded by taxes collected from today’s workers. However, the actuary’s department has warned that the National Insurance “deficit” is forecast to rise to £8.7bn in both the 2025-26 and 2026-27 tax years, up from £3.2bn in 2024-25.

If it continues to deteriorate, the Treasury could be compelled to step in. A Treasury grant is a payment voted by Parliament. It is typically paid if the balance is projected to fall below one sixth of the forecast annual expenditure on benefits, or 16.5pc. The current balance stands at 56.1pc, but is forecast to fall to 32.4pc by the 2028-29 tax year. 

Experts have warned uncertainty still lies ahead for future retirees because of the rising state pension age. As well as increasing to 67 between 2026 and 2028, it will also rise for those born on or after April 6 1977 from 2044, hitting 68 by April 2046. 

Increasing the state pension age is a seemingly straightforward way for the Treasury to save tens of billions of pounds. It will push down the cost of the state pension, as well as generate more revenue in income tax from people who have no choice but to stay in the workforce for longer. 

However, history suggests that increasing the state pension age deepens social inequality across the country. When the state pension increased from 65 to 66, one in seven 65-year-olds were pushed into income poverty as a result, the IFS estimated.

In the most deprived 20pc of areas in England, there was an 11 percentage point increase in the number of over-65s returning to work. That was more than double the wealthiest 20pc of areas, which recorded a rise of just four percentage points. 

It could take both an increase in the state pension age and reform of the triple lock policy to balance the impact on both public spending and social welfare. 

How can I qualify for the full new state pension? 

In order to qualify for a full state pension, you must have a 35-year record of National Insurance Contributions or received National Insurance credits for raising children or providing care. You need at least 10 years in total on your National Insurance record to receive any state pension.  

Each individual’s state pension payments can look different depending on when they were born, how long they worked, and if they took any career breaks. 

You can help your state pension grow by applying for National Insurance credits. These fill the gaps in your NI record and can apply to a range of periods such as being on jobseeker’s allowance, maternity allowance, looking after a child under 12, or even being on a government-approved training course. 

Your full state pension will also look different depending on when you were born. Those who reached retirement age before 2016 will be entitled to the basic state pension, also known as the “old” state pension. 

There is a gap between the old and the new state pension because retirees on the former were entitled to an additional “state earnings-related pension scheme” known as Serps.