By Clare Yates
8 min read
If you receive the State Pension, or will be doing soon, there are changes to the pension level and qualifying age ahead. For anyone with pension savings to access, it’s also important to keep abreast of what’s happening to annuity rates and drawdown investment performance.
Here’s our roundup of some important changes and trends to look out for this year.
The State Pension will rise again – thanks to the triple lock
According to the Institute for Fiscal Studies (IFS), from April 2026, the State Pension is likely to increase by 4.8%, following the rules of the triple lock. This guarantee means the State Pension rises each year by the highest of average earnings growth, inflation, or 2.5%. Earnings growth was the strongest factor in the relevant period, so that’s what will drive the April 2026 increase.
For people on the full new State Pension (generally those who reached State Pension age after April 2016), this would push weekly payments to around £241.30, or just over £12,547 a year. That’s an extra £574 a year.
Those on the basic State Pension (typically people who reached State Pension age before April 2016) are likely to see a smaller rise to £184.90 per week, which works out at around £9,615 a year.
State Pension age changes begin in 2026
Alongside changes to payment levels, 2026 also marks the start of the latest shift in when people can claim the State Pension.
From April, the State Pension age will begin rising from 66 to 67. Rather than happening all at once, the increase is being phased in gradually and will complete by 2028.
The exact age at which you are eligible for the State Pension depends on your date of birth. For some people, there will be a delay of just a month or two, while for others it could be close to a full year. This makes it especially important to check your individual State Pension age, rather than relying on assumptions or outdated information.
The table below shows how the State Pension age is changing for you, depending on your date of birth.
Source: GOV.UK State Pension age timetable
For those planning to retire around this time, the change could have a real impact on income planning. A later State Pension age may mean relying on workplace pensions, personal pensions, savings or part-time work for longer than originally expected. In some cases, it could also affect decisions around when to stop working or how quickly to draw down pension savings.
If you’re approaching your mid-60s, it’s worth reviewing your retirement plans now. Checking your State Pension age and forecast on gov.uk can help you understand when payments will start and how much you’re likely to receive, giving you more time to plan for any potential gap in income.
Pension Credit: extra support for lower-income retirees
The Department for Work and Pensions has confirmed that Pension Credit will also be uprated in line with this increase, providing extra support to the lowest-income pensioners.
From April, the standard Pension Credit will top up weekly income to a minimum of £238 per week for a single person and £363.25 per week for a couple.
A growing issue: State Pension and tax
While the State Pension increase is welcome, it comes with a slight sting in the tail for some of us. The Personal Allowance – the amount you can earn each year before paying income tax – remains frozen at £12,570 for 2026/27. As a result, the full new State Pension will be just £22 under that threshold.
For retirees, this makes tax planning more important than ever. Understanding how your State Pension interacts with workplace pensions, personal pensions, annuities and savings income could help you avoid unexpected bills.
If you have other sources of income, it’s worth running through a simple calculation to see whether you might cross the Personal Allowance threshold. This could include part-time work, dividends, interest from savings, or income from rental properties.
In some cases, adjusting the timing of pension withdrawals, splitting income between tax years, or using tax-free savings accounts such as ISAs may reduce your overall tax liability. Talking through your options with a financial adviser or using HMRC’s online tools can prevent you from being caught out unexpectedly.
National Insurance records still matter
The amount of State Pension you receive is based on your National Insurance (NI) record. To qualify for any State Pension at all, you’ll need at least ten qualifying years. To receive the full new State Pension most people need around 35 qualifying years of NI contributions. In simple terms, the more qualifying years you have, the higher your weekly pension is likely to be.
If there are gaps in your NI record, you may receive less than the full amount. This is fairly common and can happen for all sorts of reasons, such as spending time working abroad, earning below the NI threshold, taking career breaks, or not claiming NI credits when eligible.
The good news is that some gaps can be filled. In certain cases, you may be able to claim missing credits or pay voluntary contributions to top up your record. There is a limit, though. You can usually only buy back up to six years, so it’s worth checking your NI history sooner rather than later.
While this option isn’t right for everyone, it can significantly increase guaranteed retirement income for some people. Check if you might benefit from plugging any gaps on the government's National Insurance checker tool.
Annuities still strong on the radar in 2026
Another notable trend this year is likely to be continued strong interest in pension annuities. These are a way of turning pension savings into guaranteed income, for life or a fixed-term. The income people can secure from an annuity has grown in recent years, driven by higher annuity rates.
According to the Telegraph, annuities moved back into the spotlight after lifetime annuity rates reached their highest level in around a decade last year. Data cited by the paper shows average rates peaked at 7.72% in May 2025, compared with around 4.7% in mid-2020. While rates have eased a little since then, they’re still historically high and interest in annuities remains strong.
No one knows exactly where annuity rates will head in 2026, as they’re influenced by wider economic conditions and long-term interest rates. However, for people concerned that rates could fall, locking in a guaranteed income now may offer reassurance. Unlike pension drawdown, annuities are not affected by market ups and downs once they are set up, as they pay a fixed income for life or for an agreed period.
Market trends and the impact on income drawdown
Annuities are not the only option for turning pension savings into income. Pension drawdown remains a key part of the retirement income picture, particularly for those who want flexibility. With drawdown, pension funds stay invested and income can be adjusted over time, but this also means returns are linked to market performance.
Fidelity point out that if you’re taking income from investments, what happens in the first few years of retirement really matters. A sharp market fall soon after you stop working can have a much bigger impact on how long your pension lasts than a similar dip later on.
They also note that, towards the end of 2025, investors had become increasingly nervous about high stock market valuations, with some questioning whether markets could fall after a prolonged period of strong performance.
This is of course just one view. The reality is that financial markets are very hard to predict, and may continue to rise. No one can be certain which way they will go in 2026.
Some retirees may choose to combine approaches. Using an annuity to cover essential spending, while keeping some pension savings in drawdown for flexibility or growth potential, can help balance security and control.
If you’re exploring annuities, it’s worth comparing current rates and understanding the different types of annuity available, such as level, escalating or joint-life annuities, alongside how they might fit with other income options.
Planning ahead matters more than ever
With higher State Pension payments, frozen tax thresholds and a range of retirement income options, 2026 is a year where small decisions could have a big impact. Reviewing your expected income, checking your State Pension forecast, and understanding how different pension choices fit together can help you stay in control.