The state pension is rising by hundreds of pounds this financial year, but the increase is not uniform across all pensioners. Those on the full state pension will be £575 better off in 2026/27, while retirees receiving the older basic state pension will get a rise of just £440.
The difference reflects the two-tier structure of the UK state pension system, which has been in place since April 2016. Anyone who reached state pension age before that date receives the basic state pension, worth £9,614 a year. Those who retired afterwards receive the full state pension, worth £12,547 a year.
Two rates, two increases
The gap between the two annual rates currently stands at £2,933. That is a substantial shortfall for older pensioners, many of whom rely on the state pension as their primary source of income. Although some pre-2016 retirees receive additional top-up payments, such as the Additional State Pension or graduated retirement benefit, these do not close the gap for everyone.
This year's increase will make the disparity even more pronounced. The full state pension rises by £575, equivalent to £11.06 a week, while the basic state pension rises by £440, equivalent to £8.46 a week. The £135 difference in the cash increase further widens the inequality between the two groups.
How the triple lock works
The triple lock is a government commitment to increase the state pension each year by the highest of three measures: inflation, average earnings growth, or 2.5 per cent. The policy was designed to ensure pensioners do not fall behind the cost of living.
However, because the triple lock is applied as a percentage increase, it inevitably produces a larger cash uplift for those on the higher full pension. Over time, the gap between the two tiers grows ever wider, as the percentage increase is calculated on different base amounts.
Critics have long complained that the system is unfair to pensioners who retired before 2016. They argue that having two different rates, with the basic pension worth considerably less, penalises those who paid National Insurance under the old rules. Supporters of the system counter that top-up payments and the gradual phasing out of the basic pension will eventually resolve the disparity.
Burnham defends the triple lock
Prime Minister Andy Burnham has so far resisted calls to scrap the triple lock. In the face of criticism from those who argue the policy is unsustainable, Burnham has insisted the triple lock will remain in force at least until the end of the current Parliament. This means the current system, and the growing gap between pension tiers, is set to continue for years to come.
Burnham's position effectively guarantees that the full state pension will continue to rise by more in cash terms than the basic pension. As new retirees join the full scheme and older pensioners gradually pass away, the basic pension will eventually be phased out entirely.
Impact on today's pensioners
For most current pensioners, the smaller £440 rise is the more relevant figure. The majority of over-65s are still on the basic state pension, because they retired before 2016. This means the larger £575 increase applies only to a minority of retirees who have reached state pension age in the last decade.
The continued existence of two rates remains a source of complaint among pensioners and campaigners, who argue the system is unfair to those who worked and contributed under previous rules. But with the triple lock protected by the Prime Minister, there is no immediate prospect of the gap being closed.
The triple lock guarantees an annual increase to the state pension each year to match whatever is highest out of inflation, wage growth or 2.5%. This mechanism is designed to protect pensioners from rising living costs, but it also means the gap between the two pension tiers will keep widening with every passing year.
Burnham has not indicated any willingness to reform the system further. For now, pensioners must accept that not all over-65s are treated equally, and the disparity between the older and newer state pension arrangements is only set to grow.
