State pensions will rise by 2.5 per cent next year, the government has announced.

In her statutory annual review of benefit and State Pension rates, Therese Coffey, secretary of state for work and pensions, confirmed the state pension hike, in line with the government’s manifesto commitment not to tinker with the triple lock.

The new rates will come into effect on April 12, 2021 and apply to the 2021/22 tax year. She said: “The Social Security (Up-rating of Benefits) Act 2020 enables me to increase the basic and new state pensions and the Standard Minimum Guarantee in Pension Credit by providing a discretion to increase them for one year even though there has been no growth in earnings.” The full rate of the new state pension will now be worth £179.60 per week.

The standard minimum guarantee in pension credit will also increase by the same cash amount as the basic State Pension, rising by 1.9 per cent. The announcement by the secretary of state for work and pensions will come as some relief to pensioners who had expected changes to the triple lock despite the pre-Covid election manifesto by the Conservatives.

However, while chancellor Rishi Sunak did not announce expected pensions tax changes in his spending review yesterday (November 25), pensions commentators have warned the UK’s complicated pensions taxation system was not out of the woods yet.

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