Income boost for millions of pensioners and working people but lower increase for some pensioners

6th April 2025

Millions of pensioners will receive as much as £470 more a year added to their State Pension from today. The government's' ironclad commitment to the pensions Triple Lock throughout this parliament is keeping up pension levels but many get less due to the changes in 2016 - see explanations a he bottom of this page.

Millions of pensioners to receive up to an additional £470 in their State Pension this year.

Triple Lock means those receiving the State Pension are set to increase by up to £1,900 over the term of this Parliament.
Over five million households receiving working-age benefits such as Universal Credit will also see an average boost of £150, with Plan for Change putting more money in working people's pockets.

This comes alongside the annual uprating of working-age benefits such as Universal Credit, with people receiving those set to receive an extra £150 on average over the course of this year - an increase set to benefit 5.7 million working-age households. Disability benefits such as Disability Living Allowance, Carers Allowance and child benefits are also set to increase by the same amount.

The Triple Lock - which guarantees that the State Pension increases annually by the highest of inflation, average earnings growth or 2.5% - means the basic and new State Pensions are increasing by 4.1%, well above the current level of inflation.

These changes come alongside increases to the National Minimum Wage and National Living Wage, benefiting three million eligible workers across the country. With the National Living Wage increasing to £12.21 for those aged 21 and over and the National Minimum Wage for those aged 18 to 20 seeing a record increase to £10 an hour, three million workers will benefit, with eligible full-time workers set to see an increase in their annual salary of £1,400.

This support is securing Britain's future through the Plan for Change, which is delivering security and renewal by kick-starting economic growth to put more money in working people's pockets and rebuilding the NHS.

Work and Pensions Secretary Liz Kendall said:
Our ironclad commitment to the Triple Lock gives pensioners across the country the certainty and security they need to live a full life in retirement.

We are putting more money in people's pockets and driving up household income as part of our Plan for Change.

Minister for Pensions Torsten Bell said:
Raising the State Pension and rescuing the NHS - these are this government's priorities to give all pensioners the dignity they deserve in their retirement. Those who have worked hard throughout their lives, paying into the system, are owed nothing less.

We're improving the lives of millions of pensioners through our £7.84 billion additional funding for the State Pension this year. That means up to £470 extra in pensioners’ pockets from this week and comes alongside our work to boost Pension Credit uptake, and the £26 billion we’ve invested in the NHS that has seen waiting lists in England fall for 5 months in a row.

Chancellor of the Exchequer Rachel Reeves said:
With today’s increase in working-age benefits, and our ironclad commitment to pensioners through the Triple Lock, we are making the decisions that support those who need it in Britain, putting money into people’s pockets and delivering our Plan for Change.

The uprating of State Pensions and working-age benefits amounts to a cash boost of over £6.9 billion, demonstrating our commitment to ensuring pensioners enjoy the dignity and respect they deserve in retirement, while also supporting low-income families.

It also comes alongside proposals for the biggest welfare reforms for a generation. These measures are designed to ensure a welfare system that is fit for purpose and available for future generations - opening up employment opportunities, boosting economic growth and tackling the spiralling benefits bill while also ensuring those who cannot work get the support they need.

That support also includes help for pensioners. The government’s drive to support low-income pensioners has led to 50,000 extra Pension Credit awards since the summer - an increase of 64% compared to the same period last year.

Pension Credit is worth on average £4,300 a year and also unlocks support including help with Housing Costs, Council Tax and free television licenses.

Support also includes a £742 million extension of the Household Support Fund in England, from 1 April 2025 until 31 March 2026, providing support with the cost of essentials such as food, heating and bills.

The majority of the new rates will apply from Monday 7 April 2025. Please see here for a full list of rising benefits: Benefit and pension rates 2025 to 2026 -https://www.gov.uk/government/publications/benefit-and-pension-rates-2025-to-2026/benefit-and-pension-rates-2025-to-2026
Those in receipt of the State Pension and other uprated benefits will see an increase in their next payments following Monday 7 April.

Details of when the State Pension is paid can be found on GOV.UK: The new State Pension - https://www.gov.uk/new-state-pension/when-youre-paid

With uprating in effect, pensioners receiving the full basic State Pension will see their weekly payments rise from £169.50 to £176.45 per week, worth an additional £360 a year.

In addition, the full rate of the new State Pension will increase from £221.20 to £230.25 per week, an increase of £470 a year.

People in receipt of Universal Credit and other benefits including Personal Independence Payments will see their payments increase by 1.7% with 5.7 million households on Universal Credit to gain £150 on average.

The minimum guarantee for Pension Credit - the minimum amount that someone on Pension Credit will receive - is also set to increase by 4.1% from 7 April. For single pensioners it will increase from £218.15 to £227.10. For couples it will increase from £332.95 to £346.60.

The reasons for Two levels of National insurance Pensions
The two levels of National Insurance pensions in the UK exist due to changes in the system over time. Here's a breakdown:

Old State Pension: Before April 6, 2016, the state pension system had two components:

Basic State Pension: Based on National Insurance contributions, providing a fixed amount.

Additional State Pension: Also known as SERPS (State Earnings-Related Pension Scheme), this was linked to earnings and contributions.

New State Pension: Introduced on April 6, 2016, to simplify the system. It replaced the old system for people reaching pension age after this date. The new pension is based on National Insurance records, requiring 35 qualifying years for the full amount.

The transition created two levels because people who contributed under the old system still receive pensions based on those rules, while newer retirees follow the simplified system.

The changes to the UK state pension system have had varied impacts on individuals, depending on their circumstances:

Simplification for New Retirees: The new state pension system introduced in 2016 is simpler, providing a flat-rate pension for those with 35 qualifying years of National Insurance contributions. This has made it easier for new retirees to understand their entitlements.

Impact on Contracted-Out Workers: Individuals who were part of workplace pension schemes that "contracted out" of the additional state pension may receive less under the new system. Their National Insurance contributions were lower, which affects their state pension amount.

Women and Caregivers: The new system has improved outcomes for some groups, such as women and caregivers, who may have gaps in their National Insurance records due to time spent raising children or caring for others.

Transition Challenges: Those who retired before 2016 remain on the old system, which includes the basic state pension and additional state pension. This creates disparities between retirees under the old and new systems.

Future Adjustments: The state pension age is gradually increasing, which may delay retirement plans for some individuals. Additionally, the triple lock mechanism ensures annual increases, but its sustainability is often debated.