Starting 6th May 2026, the state pension age will gradually increase from 66 to 67, affecting anyone born between 6th April 1960 and 5th April 1977. This change will be phased in until 6th March 2028 and comes as part of long-standing government plans to keep the pension system sustainable.
At the same time, the new state pension is set to rise by 4.7% in April 2026, reaching approximately £12,534 per year. This leaves just £36 below the frozen personal tax allowance of £12,570, meaning that by April 2027, state pension payments are almost certain to exceed the tax-free threshold. This shift may see hundreds of thousands of pensioners paying income tax on their state pension for the very first time. Experts warn that the government is facing mounting pressure to either lift the personal allowance or review the triple lock policy.
Chancellor Rachel Reeves faces a significant challenge ahead of the Autumn Budget, set for 26th November 2025. Government borrowing reached £83.8 billion in the five months to August this year, £16.2 billion higher than in the same period last year and far exceeding official forecasts. As a result, tax rises are widely anticipated, with the Chancellor signalling that any increase will target those with higher incomes or more wealth rather than working families. The Treasury stresses that these measures are necessary to maintain economic stability and avoid a return to austerity.
Looking further ahead, a government review of the state pension age is scheduled for March 2029 and could recommend accelerating the rise from age 67 to 68, currently planned for 2044 to 2046. The review will consider whether the system remains sustainable as life expectancy rises and the cost of pensions continues to grow.
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