State pension payments will increase by 4.8% in April 2026 under the triple-lock system. However, most pensioners will receive less, and those solely reliant on the state pension won’t pay income tax if payouts exceed the £12,570 personal allowance. Critics call the system a “complete mess” with potential unfairness.

The Institute for Fiscal Studies campaigns against the triple lock, which has cost the government more than anticipated. The IFS suggests replacing it with a “smoothed earnings link” like in Australia. With the state pension set to reach £12,548 a year in 2026, concerns arise about encroaching on the personal allowance.

The state pension system is complex, with the triple lock affecting new state pension payments. Older pensioners may receive less than the estimated full payout of £12,540 in 2026/27. Around 12 million UK citizens receive the state pension, with over eight million on the “old” state pension. Age and contributions affect eligibility.

The government announced a review of retirement policy in July, including changes to the state pension age. The state pension age is set to rise to 67 by 2028 and possibly to 68 in the 2040s. Means testing of state pensions and accelerated age increases are under discussion to manage government liabilities.

Aside from state pension changes, the chancellor also modified rules on salary sacrifice pension contributions but did not reduce tax-free cash retirees can take from private pensions under the “pension freedom” rules. The Budget aims to address retirement under-saving and manage the state pension bill amid rising life expectancies.

Read more at Morningstar: State Pension Shakeup: What the Autumn Budget Means for Your Retirement