Good news for UK expats: State pension set for £400 boost

The UK’s state pension is expected to rise by more than £400 annually in 2025/26, taking the full yearly payout to nearly £12,000 for those who reached pensionable age after 2016.

This increase comes as a result of the Triple Lock policy, a financial mechanism designed to protect pensioners’ incomes from inflation and wage stagnation.

This anticipated boost follows a £900 increase seen in 2023, and according to calculations reported by the BBC, pre-2016 retirees could also see a rise of around £300 for those eligible for the secondary state pension.

What is the Triple Lock policy?

The Triple Lock policy ensures state pensions increase every April by the highest of three measures: inflation, wage growth, or 2.5 per cent. This system was designed to maintain the value of pensions within fluctuating economic conditions. With inflation currently high, this year’s boost comes as a sigh of relief for pensioners.

Chancellor Rachel Reeves has recently reassured the public that the Triple Lock will remain in place until the end of this Parliament, providing some certainty in these financially turbulent times.

However, Secretary of State for Work and Pensions, Liz Kendall, will ultimately decide on the specifics of the pension increase before the October budget.

UK pensioners living in the EU

If you’re living abroad and receiving the UK state pension, these increases will still apply to you, as long as you’re residing in a country with a mutual social security agreement, like most EU nations. This means your pension could go up in line with UK residents, helping maintain your standard of living amid rising costs in Europe.

For those who reached pension age before 2016, the system is slightly different. These pensioners, who may receive the secondary state pension, are also in line for a £300 boost, according to Treasury reports.

Why are some pensioners not receiving the full amount?

Despite the expected increase, many pensioners aren’t receiving the full amount they’re entitled to. Data from the Department for Work and Pensions revealed that last year, only about half of those on the “new” state pension (post-2016 retirees) were receiving the full weekly amount of £221.20. Shockingly, over 150,000 retirees were getting less than £100 per week.

This shortfall can be attributed to gaps in National Insurance contributions, a common issue for expatriates who may have spent time working abroad or taken career breaks. If you’re concerned about how much you’ll receive, it’s worth checking your National Insurance record to see if you’re eligible to make additional voluntary contributions to boost your pension pot.

This news comes at a time of widespread dissatisfaction over the government’s recent decision to scrap the Winter Fuel Allowance for most households. With energy costs soaring in both the UK and across Europe, many retirees have expressed concern about how they will manage financially during the colder months, especially as inflation remains stubbornly high.

The pension increase, while welcome, doesn’t address these broader concerns for many. Nonetheless, the protection provided by the Triple Lock does offer some comfort against the eroding power of rising living costs.

The UK government regularly updates information on state pensions for overseas residents. For more details or to check how much pension you could receive, visit the UK Government’s official pension service website.

In summary, while the expected rise in the state pension will offer a welcome boost to many, particularly for expatriates trying to balance their finances abroad, it’s also essential to be aware of potential gaps in entitlements and to take steps to maximise your pension where possible.