BBC expert gives state pension £241.30 boost update as change coming | Personal Finance | Finance
A BBC expert has revealed that Chancellor Rachel Reeves is set to announce a higher-than-inflation increase for 13 million pensioners in her forthcoming budget. Those on the full rate of the new state pension will see an increase of more than £550 a year, according to figures reportedly confirmed by the Government overnight.
BBC Money Box reporter Paul Lewis stated on X: “Govt confirms state pensions will rise with triple lock in April, gives approximate figures, stresses the bigger cash rise for minority on new state pension not the smaller cash rise in the old, and ignores that all additions, paid mainly with old state pension, will only rise with 3.8% inflation not 4.8% wage increase”.
“A 4.8% rise in the basic old state pension and the standard new state pension means they will rise from 6 April 2026 from £176.45 a week to £184.90 (old SP) and from £230.25 a week to £241.30 (new SP). All other bits SERPS, GRB, deferral, protected amount will rise by 3.8%”.
The Chancellor commented: “Whether it’s our commitment to the triple lock or to rebuilding our NHS to cut waiting lists, we’re supporting pensioners to give them the security in retirement they deserve,” the chancellor said.
The long-anticipated budget on Wednesday is expected to be significant, with ongoing speculation about potential tax increases and who will be affected. The Chancellor is predicted to reaffirm the government’s commitment to the triple lock, but it’s believed she may consider limiting how much workers can contribute to their pension pots under sacrifice schemes before paying national insurance.
Organisations representing the pensions industry and businesses are warning that any potential clampdown on salary sacrifice or pensions tax relief in next week’s Budget could risk damaging public confidence in the pensions system and undermining economic growth.
Pensions UK and the Federation of Small Businesses (FSB) have jointly written to Chancellor Rachel Reeves, urging her not to limit salary sacrifice schemes or wider pensions tax relief. Ahead of the November 26 Budget, the organisations warned that mere speculation over potential changes is already eroding saver confidence, leading to an increase in inquiries from savers and the possibility of people making unnecessary early pension withdrawals.
They also argued that this is causing uncertainty for schemes and employers. The letter to the Chancellor states: “Limiting salary sacrifice will hit working people trying to save for a better pension in retirement – including those on lower-than-average earnings for whom every penny counts both in working life and at retirement.”
It adds: “In the context of auto-enrolment, many employers use salary sacrifice to boost the contributions of those lower-earning workers that they enrol into defined contribution schemes.
“For instance, in the Government-backed Nest scheme, nearly half of large employers contribute above the statutory minimum rate of 3%, with over 14% covering the full minimum contribution of 8%.
“If salary sacrifice was removed, it’s inevitable that lower-earning workers currently benefiting from these arrangements would experience less employer generosity and higher deductions from their pay.”
Salary sacrifice arrangements enable employees to exchange part of their standard salary for alternative benefits, such as pension contributions. These arrangements offer tax benefits for both workers and businesses.
Pensions UK and the FSB stated that numerous employers depend on salary sacrifice arrangements to support staff retention and reward – and increased costs and operational disruption would make it more difficult to provide competitive benefits, invest in expansion, or plan effectively.
Payroll systems would also require modification, agreements would need to be reconsidered, and staff resources redirected, they contended.
Pensions UK stated that feedback from members in November revealed the overwhelming majority are worried about potential pension tax changes, agreeing that speculation is undermining confidence in pension saving. The organisation, which received 69 responses, reported that roughly a third of schemes had already experienced heightened member enquiries since speculation began, almost exclusively concerning the withdrawal of tax-free cash.
Three-quarters of the schemes surveyed anticipate savers are likely or very likely to modify retirement contributions or choices should the rumoured reforms proceed.
Zoe Alexander, director of policy at Pensions UK, said: “The pension system relies on stability and predictability. Savers and employers can only plan with confidence when the rules are clear and consistent.
“Any change to salary sacrifice would inject uncertainty into a system that needs long-term trust, not sudden shocks. It would add operational pressure for employers and risk undermining the retirement prospects of working people across the country.”
