State Pension Likely to Top £13,000 a Year

The state pension is expected to top £13,000 a year, reigniting the debate about its long-term affordability and generational fairness.

The rise has reignited the debate about the state pension's long-term affordability and generational fairness.

The full, flat-rate state pension is expected to rise by £488 a year in April, based on the latest official earnings figure released on Tuesday.

The so-called triple lock pension policy guarantees that the state pension will increase by either average wage growth, inflation or 2. 5% - whichever is highest.

Labour made a manifesto pledge to keep the triple lock until 2029, however economists have warned about the cost of the policy ahead of the Budget although pensioner groups say many people still face poverty in old age.

The triple lock was designed to ensure the value of the state pension was not overtaken by the increase in the cost of living or the incomes of working people.

Although the state pension age is rising to 67, the cost to the government has risen considerably too. Forecasts suggest state pension spending, already at £154bn this year, could go up by a further £600m a year by 2029-30.

The government has committed to exempting people whose only income is the state pension from tax.

The majority of pensioners have additional pension income and so pay income tax already. This means that only one in 16 pensioners will benefit under the government's pledge, saving about £91 each a year.

Analysis by consultants LCP suggested that this would be the case, but shadow chancellor Andrew Griffith has said that people living on nothing but their state pension are now facing a tax bill for the first time ever. The ONS also published figures on the UK labour force, showing that while the unemployment rate was unchanged at 4. 9%, the number of vacancies and employees on payrolls fell in recent months.

The increase will see you pay tax for the first time if your state pension exceeds the personal allowance of £12,570. This means that those who rely solely on the state pension will need to start paying income tax from April 2029.

However, economists warn that this policy may be unsustainable in the long term due to rising costs and increasing demand for state pensions.

As a result, some experts have called for alternative solutions to