It is a common question asked, will pensions increase year on year. So will they be increased for the next financial year being 2025.
It all depends upon which type of personal or workplace pensions you have.
So what type of pensions are subject to annual increases ?
The new basic state pension: (After April 2016)
During the Autumn Budget (Wednesday 30th October 2024) the Government confirmed that the State Pension will rise by 4.1% on 6 April 2025, under what’s known as the ‘triple lock‘ guarantee. The Guarantee Element of Pension Credit – a top-up benefit for low-income pensioners – will also increase by 4.1% from April 2025.
So the weekly amount will increase from £ 221.20 per week to £ 230.25 per week, a weekly increase of £ 9.05. Or an annual increase of £ 470.60. This relates to the current state pension effective for people who started to receive state pension after April 2016.
The State Pension triple lock means it is set to go up each April by whichever is the highest of:
- Average wage growth between the previous May and July (including bonuses) which was 4.1%
- The previous September’s Consumer Prices Index (CPI) inflation measure, which was 1.7%.
- With a minimum rise of 2.5%.
The triple lock is normally bases on the September’s CPI rate of inflation. Which then becomes effective from April 2025. The uplift will be automatically applies to your 4 weekly payment amount and you won’t need to apply to receive any annual increase.
The old basic state pension: (pre April 2016)
If you are in receipt of the old basic state pension you are currently receiving £ 169.50 per week. This will increase to £ 176.45 per week. A weekly increase of £ 6.95 or an annual increase of £ 362.65.
Greater information about the current and new figures can be found at https://www.gov.uk/government/publications/benefit-and-pension-rates-2025-to-2026/benefit-and-pension-rates-2025-to-2026#state-pension
What about local government of LGPS pensions ?
Active pension accounts, deferred pensions and pensions in payment are adjusted each April in line with the cost of living. The increase is based on the September to September change in the Consumer Prices Index (CPI). The CPI increase for the year up to September 2024 was 1.7%.
This means that we expect active pension accounts, deferred pensions and pensions in payment in the LGPS to increase by 1.7% in April 2025.
Again, greater information about the LGPS pension scheme can be found at https://www.lgpsmember.org/2024/10/16/pensions-increase-2025/
What about the NHS pension ?
If you receive an increase to your pension, it will start on the first Monday after 5 April each year. This year the PI will take effect from 7 April 2025. Your first payment on or after 8 April 2025 will only include the PI from that date. Details of the new annual rate will be shown on your pension advice note. This will give a forecast of your next payment with the increase applied, providing your yearly rate, tax liability and other deductions do not change.
PI is based on the rise in the Consumer Price Index (CPI) in the 12 months ending 30 September 2024. The increase for 2024/25 will be 1.7%
Again, greater information can be found on the NHS website at https://www.nhsbsa.nhs.uk/nhs-pensions
What about the Teachers pension scheme ?
Public service pensions are increased annually by the same percentage as State Additional Pensions (the State Earnings Related Pension and the State Second Pension).
It’s applied in April and is based on the increase in the Consumer Prices Index (CPI) in the 12 months to September of the previous year. This is to keep them in line with the cost of living. You can find the latest Pensions Increase information on our updates page, or https://www.teacherspensions.co.uk/
The increase is applied to payments from the first Monday after 6 April. If your April payment date falls before then, you’ll receive the increase from your May payment.
So for April 2025 increase it should be 1.7% applied to your uplifted amount.
Remember:
If you found this blog post useful and informative, then check out my other posts at https://moneyminted.co.uk. Which covers pensions, savings, investing, recommended investing books. So you can improve your financial knowledge, and you too can reach your financial goals and aims.
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