The State Pension rise is part of a wider pledge from the Government to improve support for older people, with the Chancellor setting out a vision for a new settlement for pensioners and their families.
He said: "A new settlement for older generations, a rising state pension, and a national care service that is there when older people need it, taking the burden off families, taking the burden off our NHS."
The comments put the focus on more than the annual State Pension increase, with access to care also featuring in the Government's plans for older generations.
For pensioners, the key questions are how the expected 3.9% State Pension rise will affect their weekly income, whether changes to tax thresholds will leave more people paying income tax on their pension, and what a proposed national care service would mean for people who need support in later life.
Money Saving Expert founder Martin Lewis said the announcement meant pensioners with income up to the value of the full new State Pension would not pay tax, but warned that the precise mechanism had not yet been explained.
He said: “Pensioners with income up to the value of the full new state pension (to be £13,040 from April 2027) will not pay tax. Mechanism not stated, I suspect there will be an effective increased pensioner allowance with a clawback for income above that. More when I know more.”
The full new State Pension is expected to rise to around £250.70 a week from April 2027, taking annual payments above £13,000 for the first time if the projected increase is confirmed.
- New State Pension tax allowance: Pensioners with income up to the value of the full new State Pension will not pay income tax during this Parliament.
- State Pension increase: More than 13 million State Pension recipients are set to receive a 3.9% rise from April next year, under the triple lock.
- Ex-mineworkers’ pensions: Every penny of the pension fund surplus will go to miners. Healey also pledged to continue working towards the full transfer of the guarantor’s fund.
- £100 energy payment: Around 20 million households in council tax bands A to D will receive £100 directly into their bank accounts this winter to help with energy bills.
- Energy bill support: The cut to VAT on electricity will be extended until July, taking £50 off the annual price cap.
- Fuel duty cut extended: The 5p-a-litre fuel duty cut will remain in place until July 2027, helping motorists, including pensioners who rely on their cars.
- Gas standing charges to be scrapped: The Government plans to abolish gas standing charges in 2027, according to Martin Lewis following his meeting with the Chancellor. The cost is expected to be shifted to unit rates, meaning some households could pay more.
- Lower supermarket prices: Tariffs on more than 100 supermarket products will be suspended to help keep the cost of the weekly shop down.
However, the amount each person receives will depend on their National Insurance record, while the wider impact of the Budget will also depend on the detail of any tax and social care measures announced.
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