FOAB Information

Monday, 19 January 2026

State Pension Conundrum

The UK has something called the Triple lock when it comes to State Pensions which means that each year it is raised by whichever is the highest, average earnings growth, inflation or 2.5% and at the last Budget in November the highest was inflation so the State Pension increased by 4.8% which means the full State Pension is now £240.25 a week or £12,493 per year.   
The Triple Lock is one of those rare moments where all parties have a cross party agreement to keep so regardless of which party is in charge, they go with it but as there is a gap of approximately £5bn between what is received by the Treasury in National Insurance Contributions and what the treasury pay out, the wisdom of the Triple Lock is being questioned especially as it is dangerously close to the tax free Personal Allowance figure of £12,570 at which point, even if the State Pension is your only income, you will be receiving a letter from HM Revenue & Customs with a tax demand.  
Out of the 44 European countries, the UK has the 11th most generous pension with Luxembourg the best and Armenia the worst and YouGov have a very confusing survey conducted across the nations of Europe with regards to their own State Pension.
The survey found that most Europeans believe their country’s state pension system is not generous enough and although most are concerned that state pensions will become unaffordable, do not support the given options for overhauling it.

Reduce the amount all pensioners receive in state pension payments? No.
Tax state pensions? No
Increase immigration levels to generate tax revenue? No
Raise the minimum age for state pension? No
Increase tax levels on working-age people? No

Probably not surprisingly, when pensioners were asked if their pension amount was too low they agreed it was but when asked what measures they would support to make state pension schemes more affordable, the reply was a firm 'No' to everything so not sure what the answer is but whatever they do, don't ask the opinion of Pensioners first!

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