The state pension is set to increase by 3.9 per cent in April 2027 to £13,036, exceeding the personal allowance of £12,570 for the first time.

July’s earnings figure of 3.9 per cent will be used to uprate the state pension under the triple lock guarantee, surpassing £13,000 for the first time ever.

While the state pension is set to exceed the personal allowance, the government has pledged that those living solely on the state pension above the allowance will not pay income tax on it.

However, the plan for how this will work in practice is yet to be confirmed.

The income tax personal allowance threshold has been frozen at £12,570 since April 2021.

The state pension is set to rise by July’s earnings figures following the confirmation that inflation rose by 3.5 per cent in September.

“Today’s triple lock boost will be welcomed by pensioners, but it comes with a warning: change is on the horizon,” said AJ Bell head of public policy, Rachel Vahey.

“Prime Minister, Andy Burnham, announced plans at the Labour Party conference last month to dilute the triple lock from April 2030, so that the state pension will rise by the highest of inflation or 2.5 per cent, with a further check against a smoothed average earnings growth measure.”

Vahey said that Burnham’s decision to reform the triple lock was more than an exercise in making the balance sheet add up.

“Although keen to ensure the state pension holds its value with increases in workers’ earnings, moving to a smoothed average likely means pensioners in the future will be missing out on the full increases in earnings, especially in the years when wages spike,” she added.

“But this isn’t the end of tough decisions on the state pension. Deciding when to bring forward the move in the state pension age from 67 to 68 is still hanging over this government.

“If the government wants to bring forward this change to the late 2030s, it will need to make the call soon to give people at least 10 years’ notice in line with convention for increasing the state pension age.”

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