Next year the gap between the new and old state pension will widen again (Image: Getty)
Tomorrow, data will be published showing average income growth for May-July. This is important as they are one of three elements that the triple lock uses to determine next year’s state pension increase. The other two are the September inflation rate and support at 2.5%, if both are lower. Tomorrow’s earnings are expected to be 4.1%. If so, that would be the minimum increase retirees can expect unless the September inflation figure is higher, which it probably won’t be. So this is likely to determine the rise in state pensions in April next year.
The 4.1% increase will be another reminder of why retirees value the triple lock so highly. But millions of older retirees have a sting in their tail. There are two state pensions and the amount of your pension depends on which one you are on. Those receiving the maximum full new state pension currently receive £12,547.60 a year. A 4.1% increase would cost £514.45 per year. This will increase their pension to £13,062. Those who retired before 6 April 2016 receive the old basic state pension, which is currently £9,614.80 per year. A 4.1% increase would give them an extra £394.21 a year. Over the course of the year they will receive £10,009.
So the new State Pension increases by an additional £120.24 per year, for the same percentage increase. This may not sound like much, but over time the gap widens. Next April, the difference between the full new pension and the basic state pension will break the £3,000 mark for the first time, at around £3,053.
I’m regularly contacted by Daily Express readers to complain that no one seems to care and I always do my best to fix it. They say everyone is talking about the new state pension figure as if that’s what everyone gets. This is wrong.
There are actually two types of state pension, and they arose because the system changed on April 6, 2016. People who reach retirement age after this date receive a new state pension, while those who have already reached retirement age remain on the old one.
The old system also allowed people to accumulate additional state pension through schemes including SERPS and S2P. In practice, after adding to the basic state pension, some may receive more overall. Others won’t get a penny extra and often feel like second-class citizens. It all depends on the person.
There is one more problem. Both the basic and new state pension benefit from the triple lock. But basic government pension top-ups such as Serps and S2P are not triple-locked. Instead they rise in line with inflation, meaning that when wages rise faster than prices, the additional state pension increases at a slower rate.
This adds another layer to an already damn complex system. This means that the gap between new and basic state pensioners is widening even further.
Not everyone will lose out to the same extent under the old system. Some older people have accumulated a significant additional state pension. Those on the lowest incomes can receive a pension credit, which increases their income.
However, there is no escape from the main problem. In 2025/26, around 8.2 million pensioners were still receiving the pre-2016 state pension, compared with around five million receiving the new state pension. Over time, this balance will change.
So tomorrow should bring good news for retirees, assuming income growth matches expectations.
But for millions of older retirees, this good news will leave a sour taste. The triple lock will give them another pay rise while reminding them that they are on the wrong side of a growing £3,000-plus gap.
