Chancellor, Rachel Reeves, has confirmed that the state pension will rise by 4.1 per cent by 2026, to match the average earnings element of the triple lock.

This will mean the following year’s full state pension will reach £11,975.60 per year, with an increase of £473.

This will impact “over 12 million pensioners” in the UK, Reeves claimed.

The increase, combined with the pre-planned freezing of income tax thresholds, means the full state pension will be 95 per cent of the personal allowance.

Hargreaves Lansdown head of retirement analysis, Helen Morrissey, said: “Today’s news spells good news for pensioners who can look forward to a 4.1 per cent increase in their state pension from next year.

“However, the rise will be largely wiped out by the government’s decision to restrict the winter fuel payment to pensioners on pension credit.

"With fuel bills on the rise, the loss of up to £300 will be sorely felt, and many face a tough winter ahead.”

But Standard Life retirement savings director, Mike Ambery, said while it will be a welcome increase, pensioners should be aware of the tax implications.

He said: “The personal allowance, which is the amount of income you can receive before paying tax, has been frozen since at £12,570 since 2021/22 and currently remains fixed in for quite a few years to come.

“This means that the full new state pension payment has grown from 70 per cent of the allowance in 2019/20 to a likely 95 per cent next year, leaving pensioners with only £594.40 of headroom before they begin paying income tax.

“While the state pension is on the up, it’s worth remembering that it still falls short of the £14,400 a single pensioner needs for a minimum standard of living in retirement, according to the Pensions and Lifetime Savings Association.

“For our younger generations, one way to future proof their retirement saving is to a look at workplace or private pension provision and make sure to check it matches with their retirement expectations – there are a number of online tools and calculators that can help with this.”

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