State pension payment boost CONFIRMED as millions of retirees in line for extra £575 a year

This uplift means the full new state pension will climb from £230.25 to £241.30 weekly, whilst those receiving the full basic state pension will see their payments grow from £176.45 to £184.90 per week.

Thanks to the triple lock payment uprate mechanism, state pension rates go up every year by either the rate of inflation, average growth, or 2.5 per cent; whichever is highest.

This year's rise marks the fourth-largest increase since the policy was established by the Conservative-Liberal Democrat coalition Government in 2011.

Pensioners who reached state pension age on or after April 6, 2016, qualify for the new state pension, which will now provide £12,547 annually, an increase of £574 from the previous £11,973.

Those who reached state pension age before that date receive the basic state pension, which rises from £9,175 to £9,614 a year, coming to a £439 boost.

With the Office for National Statistics (ONS) reporting consumer price index (CPI) inflation at three per cent for February, this 4.8 per cent increase delivers a real-terms gain, meaning pensioners' income should stretch further against rising costs.

The Government has positioned this pension increase as a key measure to shield households from mounting financial pressures, as the Iran war continues to drive global oil prices sharply upward and squeeze the British economy.

Work and Pensions Secretary Pat McFadden said: "I know global shocks, and the effects they have on our living costs, will be increasing anxiety for many households.

"This Government will always protect our pensioners, and that's why we are raising the full rate of the new state pension by up to £575 this coming year."

Opposition figures have called for additional interventions to support consumers, particularly with energy bills expected to climb when Ofgem's price cap expires in July and fuel costs continue to rise at petrol stations.

Pension Credit recipients will also benefit, with the standard minimum guarantee rising by 4.8 per cent to £238 weekly for single pensioners and £363.25 for couples.

However, this increase brings the new state pension to within just £23 of the £12,570 personal allowance threshold, raising concerns about future tax liability for millions of pensioners.

Kate Smith, the head of Pensions at Aegon, warned that if even the minimum 2.5 per cent increase is applied next year, the new state pension would reach £12,861, resulting in £58 of tax being owed.

She said: "While many pensioners already pay income tax because of money from other sources, including private pensions, there has been concern regarding the impact of this on vulnerable pensioners, particularly those who rely solely on the state pension."

Chancellor Rachel Reeves has pledged that no one receiving only the state pension will pay income tax on it during this parliament, though the government has yet to explain how this will be administered.

However, Ms Smith called for clarity on long-term plans, noting the current approach raises fairness questions for those with modest private pension income.