This 4.1% increase is part of the ‘triple lock’ guarantee, which aims to keep pensions valuable over time. If you receive the full new State Pension, your increase will be even more, at £474.85. But what does this mean for you, and how does it compare to other benefits like Universal Credit, which will only rise by 1.7%? Let’s examine these numbers and understand why the headlines might not tell the whole story.

The triple lock system helps State Pensions increase each year by using the highest of three options:

• Average wage growth (4.1% this year)
• Inflation (1.7%)
• A guaranteed minimum of 2.5%.

Since wage growth is higher than inflation, pensions will rise by 4.1% in 2025. This system aims to ensure that pensioners’ incomes keep up with rising living costs and wages. However, not everyone will benefit equally from this increase.

If you reached the State Pension age before 6 April 2016, you are on the old State Pension system. Under this system, the full increase will be £362.65 a year, not £474.85 as reported. Only those on the new State Pension, which is about one in four pensioners, will receive the larger increase.

To get the full State Pension, you usually need 35 years of National Insurance (NI) contributions. Many pensioners, especially those with lower incomes or gaps in employment, may not have enough NI years, which means their pension and increase will be lower.

If you are a pensioner with a low income, it’s important to see if you qualify for Pension Credit. This program helps those whose State Pension doesn’t cover their living costs. It’s especially crucial now, as Pension Credit can also provide extra support, like the Winter Fuel Payment.

Unfortunately, around 800,000 eligible pensioners do not claim Pension Credit. If you or someone you know is having financial difficulties, applying for this benefit could make a significant difference, especially with winter coming soon.

The Government will confirm these changes in the Autumn Budget on 30 October 2024. Until then, the numbers above show a good idea of what to expect. While the pension increases will be helpful, it’s important to know how they affect your situation.