What is the Bank of England predicting about inflation in the UK?

The Bank of England is predicting that the UK's Consumer Price Index (CPI) rate of inflation could reach 4% in September 2025, double the target rate of 2%.

How will the triple lock system impact state pensions in 2026?

If the Bank of England's inflation forecast is accurate, the triple lock will ensure state pensions rise by at least 4% in 2026, as inflation is set to be the highest of the three measures (inflation, average earnings, 2.5%).

Are all UK pensioners set to benefit equally from the potential state pension increase?

No, many older people do not receive the full state pension amount and are instead on less generous schemes, so a 4% increase on their "subsistence income" will still leave them struggling.

Home / Business and Economy / Pensioners Poised for Potential 4% State Pension Hike in 2026

Pensioners Poised for Potential 4% State Pension Hike in 2026

8 Aug

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Summary

Bank of England forecasts 4% inflation in September 2025
Triple lock ensures pensions rise with inflation, earnings or 2.5%
Many retirees receive less than full state pension amount

According to a report by the Bank of England, the UK's Consumer Price Index (CPI) rate of inflation is predicted to reach 4% in September 2025, double the target rate of 2%. This is significant as the triple lock system ensures state pensions rise in line with whichever is higher: inflation, average earnings, or 2.5%.

If the Bank's forecast is accurate, those receiving the full new state pension can expect an increase of at least £478 per year. However, experts caution that many older people do not receive the full state pension amount, instead relying on a less generous scheme. For these retirees, a 4% increase on a "subsistence income" will still leave them struggling.

Pensions are expected to be a key focus in the lead-up to the Chancellor's November 2025 budget. While pensioners may have reason to cheer the potential boost, the triple lock system has faced criticism over fairness, especially given the strain on public finances. Campaigners argue the policy is crucial to ensuring dignity for the UK's most vulnerable retirees.

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