If you are close to retirement or already receiving your pension, there’s good financial news that could affect your income. The UK State Pension will increase in April 2026, benefiting millions of pensioners. The Department for Work and Pensions (DWP) has confirmed the new rates, marking one of the largest increases in recent years.
This increase matters for retirees on a fixed income, as every added amount can help with daily expenses. If you are claiming the new State Pension, the basic State Pension, or if a family member is, these changes will likely impact your financial planning.
At Clarkwell & Co. Chartered Certified Accountants in Central London, we support pensioners, those about to retire, and business clients across the UK. We help you understand how these changes affect your finances. Our team offers guidance on retirement tax planning, benefit reviews, and National Insurance State Pension eligibility.
Triple Lock Pension Increase Explained
The upcoming pension increase comes from the government’s triple lock policy. This policy protects pensions by ensuring they rise each year based on the highest of three key indicators, helping them keep up with the cost of living.
- Average annual earnings growth
- Inflation, as measured by the Consumer Price Index (CPI)
- Or a baseline minimum of 2.5%
In the 2026/27 financial year, average wage growth from May to July 2025 was 4.8%, which is higher than CPI inflation at 3.8% and the 2.5% minimum. Therefore, pensions will increase by this amount.
This rise helps pensioners keep their purchasing power as living costs go up. During economic uncertainty and inflation, these adjustments are crucial for financial security. At Clarkwell & Co., our Payroll and pension compliance services in London often provide proactive pension planning to help clients adjust to these changes.
New State Pension Payment Rates for 2026/27
Let’s dive into the confirmed payment amounts.
Full New State Pension (Post-April 2016 retirees):
- Weekly payment: £241.30 (up from £230.25)
- Four-week period: £965.20
- Annual total: £12,547
Full Basic State Pension (Pre-April 2016 retirees):
- Weekly payment: £184.90 (up from £176.45)
- Four-week period: £739.60
- Annual total: £9,614
This is a significant increase in the basic State Pension, about £580 more per year for those who get the full amount. However, not all pensioners will get this increase automatically.
How much you receive depends on your National Insurance contributions. Generally, you need about 35 qualifying years to get the full new State Pension in 2026. This can change based on individual work histories, time spent abroad, or if someone was contracted out of the extra State Pension.
Many of our retirement clients ask how to boost their entitlement. We help by reviewing their national insurance records, explaining what counts as a qualifying year, and advising whether voluntary contributions are beneficial.
Pension Credit and Other Support Rates Also Increasing
The DWP has announced increases to other pension benefits. Notably, Pension Credit is rising. This helps low-income pensioners add to their weekly payments. It is essential for older adults who don’t qualify for the full State Pension or have limited extra income.
Pension Credit Rates 2026:
- Single person minimum guarantee: £238.00
- Couple minimum guarantee: £363.25
- Severe disability addition: £86.05
- Carer addition: £48.15
These increases could give important financial help to many pensioners facing high rent, energy bills, and daily costs.
Unfortunately, many eligible people miss out on Pension Credit because they think they don’t qualify. At Clarkwell & Co., we assist clients and their families in checking eligibility and handling the application process. Our accountants specialise in helping medical and healthcare professionals in the UK identify entitlement gaps in their complex work histories.
Is the State Pension Now Taxable?
Now, let’s talk about taxes. The new State Pension is £12,547 per year, just £23 below the UK tax threshold of £12,570, which will stay the same until April 2031.
This means that pensioners with extra income, like from a workplace pension, rental income, or savings interest, could end up paying taxes. The Chancellor said that retirees with only the State Pension won’t pay tax until April 2030, but this doesn’t include those with additional income. If you have both a workplace pension and the State Pension or earn interest from ISAs or savings, it may be wise to talk to a tax adviser soon.
Our London payroll services offer personalised help with pension auto-enrolment. We can assist you in organising your retirement income to keep it as tax-efficient as possible.
How National Insurance Records Affect Your Pension
Your National Insurance State Pension depends on how many qualifying years you have. To get:
- Any State Pension: You usually need at least 10 qualifying years.
- The full new State Pension: You need about 35 qualifying years.
However, gaps in your record from unemployment, living abroad, or self-employment can lower your total. You can sometimes fill these gaps with voluntary contributions, which we often recommend.
Our Chartered Certified Accountants in Islington help clients decide if making extra contributions is worth it and how it can boost their pension income over time.
Impact on Workplace Pensions and Auto-Enrolment
If you’re still working, the State Pension increase affects your workplace pension, especially if you’re in an auto-enrolment plan. With the State Pension close to the income tax limit, your workplace pension contributions might push you into a taxable bracket.
Employers need to know how their pension contributions fit with government changes. We help small and large businesses in London stay compliant and save on costs with our payroll and pension services.
Individuals need a clear strategy to combine their State Pension income in April 2026 with their workplace pension. Our team can create a personalised income forecast to meet your goals and tax needs.
London Pensioners Face Unique Financial Pressures
The UK State Pension will increase in 2026, giving all pensioners the same amount of money. However, the value of that money varies. In London, living costs are much higher than in other UK areas.
Clients at our accountants in Ruislip and Islington often worry about rising rent, utility bills, transportation, and council tax. Even with higher pension payments, these expenses can exceed the increase.
We help clients explore supplementary support, such as:
- Housing benefit
- Council tax reduction schemes
- Winter fuel payments
- Attendance allowance
All of these can play a role in helping London pensioners live more comfortably.
Tips to Maximise the 2026 Pension Increase
Here are practical steps you can take to make the most of the new rates:
- Review Your National Insurance Record: Check for any missing years and consider adding to your record voluntarily.
- Apply for Pension Credit: You may qualify even if you own a home or have some savings.
- Watch Your Tax Exposure: Talk to a professional if you have other income sources.
- Integrate Workplace Pensions: Develop a mixed income plan to prevent unexpected tax bills.
- Budget with the New Figures: Update your household budget to match your increased income and expected expenses.
We offer consultations to guide you through this process and can tailor our support to your specific retirement goals.
What the 2026 Changes Really Mean
The DWP pension changes in 2026 are good news for retirees, but they need careful thought. More money is nice, but you should plan wisely to keep it from being taxed or to not miss out on benefits.
Whether you are retired, planning for the future, or helping someone with their finances, our experts at Clarkwell & Co. can help you. We offer Payroll and pension compliance services in London, as well as accounting for medical and healthcare professionals across the UK. We’re here to support your next steps.
