Pensions in the UK 2027: State Pension Rise

Pensions in 2027 at a glance

Three things change on 6 April 2027. The full new State Pension rises by 3.9% to £250.70 a week, which for the first time takes it above the £12,570 Personal Allowance. A new Pension Tax Allowance, confirmed in the 28 October 2026 Budget, cancels the small tax bill that would otherwise create. And unused pension pots start counting towards inheritance tax. The rules for paying into a pension are unchanged: the £60,000 annual allowance and tax relief at your marginal rate stay as they are.

State Pension from April 2027

The triple lock raises the State Pension each April by the highest of earnings growth, inflation or 2.5%. For 2027 the deciding figure is earnings growth of 3.9%:

• New State Pension (reached State Pension age on or after 6 April 2016): £241.30 → £250.70 a week, a rise of £9.40 a week or £488.80 a year. This figure is confirmed in the Budget documents.

• Basic State Pension (reached State Pension age earlier): £184.90 → £192.10 a week, a rise of £7.20 a week. This is the 3.9% increase applied to the current rate; the DWP publishes the final basic rate with the full benefits uprating order later in the year.

The government has committed to the triple lock through to the April 2029 increase. From April 2030 it plans an adjusted version: according to the DWP factsheet, the State Pension would rise by the highest of inflation, 2.5%, or the amount required to return or maintain its value relative to earnings, rather than tracking every year of above-inflation wage growth. That is a plan for the next Parliament, not yet law.

The new Pension Tax Allowance

At £13,036.40 a year, the full new State Pension is £466 above the frozen Personal Allowance, so someone living on it alone would owe about £93 in income tax for 2027/28. The Pension Tax Allowance removes that. It works like this:

• You qualify if you are over State Pension age (or reach it during the tax year) and your total income is no more than £13,036.40 – from any source, including a private pension, part-time or self-employed earnings, rent and savings interest.

• Between £13,037 and £13,319 the allowance tapers: it falls by £1 for every £3 of income above the threshold. At £13,319 or more you get nothing.

• HMRC applies it automatically from the information it already holds. You do not claim it, and it does not change your Personal Allowance.

• It runs for 2027/28, 2028/29 and 2029/30 and will rise each year with the new State Pension.

The allowance is a tax reduction, not a payment: if it is worth more than the tax you owe, you do not get the difference back.

State Pension age keeps rising

Since 6 April 2026 the State Pension age has been moving from 66 to 67. If you were born between 6 April 1960 and 5 March 1961, you reach it at 66 plus between one and eleven months, depending on your birth month. Anyone born on or after 6 March 1961 has a State Pension age of 67, so the first people to claim at 67 do so from 6 March 2028. Check your exact date and your forecast at gov.uk/check-state-pension.

Private pensions in 2027

The Budget left the tax treatment of pension saving alone. For 2027/28 you can still pay in up to £60,000 a year with tax relief at 20%, 40% or 45%, the money purchase annual allowance stays at £10,000, and the lump sum allowance stays at £268,275.

The big change is inheritance tax. For deaths on or after 6 April 2027, most unused pension funds and death benefits count as part of the estate. Pensions used to sit outside it, which made them a common way to pass money on; from April that stops working for estates above the nil-rate bands. Death-in-service benefits paid from a registered scheme stay outside the estate.

Two dates further out are already fixed: the normal minimum pension age rises from 55 to 57 on 6 April 2028, and from 6 April 2029 only the first £2,000 a year of pension contributions made by salary sacrifice stays free of National Insurance.

What the self-employed should check

A full new State Pension needs 35 qualifying years of National Insurance, and at least 10 to get anything. Employees collect them through payroll; you collect them through Self Assessment:

• If your profits are above the Small Profits Threshold (£7,105 in 2026/27), you are treated as having paid Class 2 contributions and the year counts, even though you pay nothing for it.

• If your profits are below that, you can pay voluntary Class 2 at £3.65 a week (2026/27) – far cheaper than Class 3 at £18.40 a week – to keep the year. The same contributions protect your entitlement to sick pay for the self-employed through New Style ESA.

• If you have not yet registered, our guide on how to register for Self Assessment explains the 5 October deadline.

The 2027/28 National Insurance rates and thresholds had not been published when this article was written; check them before paying voluntary contributions for the new tax year.

Conclusion:

For most people 2027 is a year of small numbers that matter: £9.40 more a week, a £93 tax bill that never arrives, a pension age one more month away. For anyone with a sizeable pension pot it is the year inheritance planning changes. And for the self-employed it is a reminder that qualifying years do not take care of themselves – check the forecast, fill cheap gaps while they are cheap, and keep an eye on the 2027/28 thresholds when they appear.