How much will UK state pension rise 2023? Triple lock increase explained, how to work out 2023/24 rate

The Rishi Sunak government announced major pension reform in the Spring Budget 2023, with Chancellor Jeremy Hunt scrapping the personal allowance

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Pensioners are set to receive a long-awaited boost to their incomes from 1 April, as the government will increase the weekly amount of state pension they receive for the new tax year in line with its triple lock policy.

After a rise of just 3.1% last April - a real-terms cut as inflation was already almost three-times higher by that point - pensioners who rely on the weekly state handout suffered a major real-terms drop in their spending power. While the latest double-digit percentage boost will make up for some of that shortfall, it will not lift pensioners’ income relative to where it was before the inflation crisis hit - particularly after inflation rose unexpectedly in February 2023.

It comes after Chancellor of the Exchequer Jeremy Hunt sought to get early retirees back into the UK workforce during his Spring Budget 2023. While he did not reform the state pension system, he targeted private pension pots by scrapping the lifetime allowance and raising the annual tax-free contributions allowance by 50% to £60,000.

The Sunak government had also been considering raising the retirement age to 68-years-old sooner than originally planned, although it has since announced 2044 will remain as the date for the increase. The state pension age will rise to 67 from April 2026. A move to lift the pension age by French President Emmanuel Macron has sparked nationwide protests in France.

So, how much will the state pension rise by from April 2023 - and how can you calculate what you’ll get? Here’s everything you need to know.

How is the state pension calculated?

Since entering government in 2010, albeit initially as part of a coalition with the Liberal Democrats, the Conservatives have repeatedly enacted a manifesto pledge to maintain a ‘triple lock’ on the state pension. The only exception has been the 2021/22 financial year, where ministers downgraded it to a double lock over concerns about massive wage hikes in the wake of the end of the furlough scheme.

The triple lock means the state handout goes up every April by the same rate as any one of the three yardsticks set out below. Pensioners will get whichever comes out as the highest percentage increase:

The idea behind the policy is that pensioners would not see a real-terms drop in their incomes. However, the record levels of inflation seen in 2022 meant last year’s increase of 3.1% had already been wiped out by price rises before it came into effect, and has left pensioners battling a major shortfall in their budgets ever since.

The Living Pension has been launched to help lower earners put away more for retirement (image: Adobe)The Living Pension has been launched to help lower earners put away more for retirement (image: Adobe)
The Living Pension has been launched to help lower earners put away more for retirement (image: Adobe)

While the state pension is going to rise by 10.1% in April as a result of the triple lock (10.1% being the CPI rate in September 2022), it will not make up for the inflation the country has experienced over the last 18 months, with February 2023’s surprise increase to 10.4% piling further cost of living misery onto the elderly.

According to February 2023 research by respected think tank the Institute for Fiscal Studies (IFS), real benefit rates were 7.6% lower in 2022 compared with their pre-pandemic levels in 2019, and will be 6.2% lower in 2023 and 2% lower in 2024. It has called on the government to change how it links pensions to price indexes - something that has been echoed by Tory backbench MP Nigel Mills in the House of Commons.

How much will state pension rise April 2023?

The state pension will rise 10.1% from April, which means the maximum amount of state pension you can receive will climb to £203.85 a week for the 2022/23 financial year.

This works out as an extra £18.70 a week and an additional £972.40 over the next 12 months. It means pensioners will get £10,600.20 a year.

How can you work out your state pension?

How much state pension you get depends on the number of years you have made National Insurance contributions (NICs) for. NICs are taken out of your wage packets (or profits, if you’re self-employed) and are used to pay for state benefits.

To qualify at all, you have to have paid NICs (or received National Insurance credits, e.g. for being a full-time carer) for 10 years across your working life. But to receive the maximum amount, you need a minimum of 35 years of NICs on your record. You can then access the state handout from the age of 66.

The UK state pension goes up every April (image: Adobe)The UK state pension goes up every April (image: Adobe)
The UK state pension goes up every April (image: Adobe)

To work out how much state pension you are currently in line for (if you are below the 35-year limit), divide the current full state pension amount (£185.15) by 35, and then multiply it by the number of years you have worked since 5 April 2016. If you want to calculate it for next year, do the same again but with the full state pension amount of £203.85.

If you made NICs before April 2016, you can find out how much state pension you could get, when you can receive it, and how you might be able to increase it, by visiting the government’s pension calculator on its website.