The Pensions Increase (Review) Order 2026
This Statutory Instrument, The Pensions Increase (Review) Order 2026, sets out the annual percentage increases to be applied to official public service pensions in the UK starting from April 6th, 2026, based on a direction given by the Secretary of State for Work and Pensions regarding inflation adjustments; it specifies a 3.8 per cent increase for most pensions that began before April 7th, 2025, provides a formula for pensions starting later, and details adjustments for lump sums and reductions where a recipient is also entitled to a Guaranteed Minimum Pension.
Arguments For
Ensures that public service pensions maintain their real-term value by applying an annual uplift calculated according to government directives.
Provides specific, legally mandated mechanisms for calculating percentage increases for different pension commencement dates, ensuring fairness across cohorts.
Addresses technical pension matters, such as adjustments for Guaranteed Minimum Pensions (GMPs) and increases for lump sums, maintaining coherence within the pension framework.
Establishes clear commencement and territorial extent, confirming the Order applies across England, Wales, Scotland, and Northern Ireland from April 6th, 2026.
Arguments Against
The calculation method, which relies on prior directions from the Secretary of State regarding additional pension entitlements, requires external reference which can complicate direct interpretation.
The reduction mechanism related to Guaranteed Minimum Pensions (Article 4) introduces complexity and potential for discrepancies unless specific Treasury directions are issued.
The Order details specific, pro-rated increases for pensions starting after April 7th, 2025, which requires complex cross-referencing with reference tables provided in the Explanatory Note.
The Order is primarily focused on retrospective adjustments based on past inflation figures, rather than forward-looking economic forecasts, which may limit its effectiveness against future cost-of-living changes.
STATUTORY INSTRUMENTS
2026 No. 256
PENSIONS
The Pensions Increase (Review) Order 2026
This defines the instrument as a Statutory Instrument made in 2026, numbered 256, concerning Pensions, formally titled The Pensions Increase (Review) Order 2026.
| Made - - - | 9th March 2026 | |------------------------|------------------| | Laid before Parliament | 11th March 2026 | | Coming into force - | 6th April 2026 |
This table specifies the dates the Order was officially made (March 9th, 2026), presented to Parliament (March 11th, 2026), and the date it legally came into effect (April 6th, 2026).
The Secretary of State for Work and Pensions has, by virtue of section 151 of the Social Security Administration Act 1992( 1 ), given a direction( 2 ) that the sums mentioned in section 150(1)(c) of that Act are to be increased by a specified percentage.
The Secretary of State for Work and Pensions exercised authority under the Social Security Administration Act 1992 to issue a direction specifying the percentage increase to be applied to certain benefit sums.
The Treasury make this Order in exercise of the powers conferred by sections 59(1), (2), (5) and (5ZA) of the Social Security Pensions Act 1975( 3 ) and now vested in them( 4 ).
The Treasury formally issues this Order by using the powers granted to them under specific subsections of the Social Security Pensions Act 1975.
Citation, commencement and extent
- -(1) This Order may be cited as the Pensions Increase (Review) Order 2026 and comes into force on 6th April 2026.
Article 1(1) allows the instrument to be formally named the Pensions Increase (Review) Order 2026 and confirms its effective start date is April 6th, 2026.
(2) This Order extends to England and Wales, Scotland and Northern Ireland.
Article 1(2) clarifies that the territorial scope of this legislation covers all parts of the United Kingdom: England, Wales, Scotland, and Northern Ireland.
Interpretation
- -(1) In this Order, 'the Act' means the Social Security Pensions Act 1975.
Article 2(1) establishes that throughout the text of this Order, whenever the term 'the Act' is used, it refers specifically to the Social Security Pensions Act 1975.
(2) In this Order, any reference to a pension is a reference to a pension which began before 6th April 2026( 5 ).
Article 2(2) defines which pensions are subject to the rules in this Order, limiting them to those pensions whose commencement date was prior to April 6th, 2026.
Pension increase: annual rate and lump sums
- -(1) This article applies to an official pension if-
- (a) a qualifying condition is satisfied; or
- (b) the pension is-
- (i) a derivative pension;
- (ii) a substituted pension; or
- (iii) a relevant injury pension.
Article 3(1) specifies which types of official pensions are subject to the increase rules laid out here: those meeting a 'qualifying condition' or those categorized as derivative, substituted, or relevant injury pensions.
(2) In relation to any period on or after 6th April 2026, the pension authority may increase the annual rate( 6 ) of the pension-
- (a) for a pension which began before 7th April 2025, by 3.8 per cent;
- (b) for a pension which began on or after 7th April 2025, by 3.8 per cent multiplied by- [Image referring to calculation based on months]
Article 3(2) dictates the annual rate increase applied by the pension authority for periods starting April 6th, 2026.
Pensions starting before April 7th, 2025, get a full 3.8 per cent increase.
Pensions starting on or after that date receive a proportionally reduced increase calculated based on the time elapsed since commencement, as referenced by the formula involving the variable A (number of complete months).
(3) In relation to a lump sum( 8 ) which is payable on or after 7th April 2025 but before 6th April 2026, the pension authority may increase the lump sum by 3.8 per cent multiplied by- [Image referring to calculation based on months]
Article 3(3) addresses the increase for lump sums paid between April 7th, 2025, and April 6th, 2026.
The increase percentage is calculated by multiplying 3.8 per cent by a fraction, where the numerator is the number of complete months between the pension's start date (or April 7th, 2025, whichever is later) and the payment date, reflecting a pro-rata adjustment.
Reductions in respect of guaranteed minimum pensions
- -(1) Where-
- (a) a person is entitled to an increase in a guaranteed minimum pension on 6th April 2026; and
- (b) entitlement to that guaranteed minimum pension arises from an employment from which (either directly, or indirectly by virtue of the payment of a transfer credit) entitlement to the official pension also arises,
Article 4 introduces conditions under which an otherwise applicable pension increase must be reduced.
This applies when an individual is due an increase on their Guaranteed Minimum Pension (GMP) on April 6th, 2026, and this GMP originated from the same employment that generated the official pension being increased (including cases involving transferred benefits).
the amount by reference to which any increase is calculated for the purposes of article 3(2) must be reduced by an amount equal to the rate of the guaranteed minimum pension unless the Treasury otherwise direct in accordance with the provision of section 59A of the Act( 10 ).
If the conditions in Article 4(1) are met, the base amount used to calculate the standard increase under Article 3(2) must be reduced by the rate of the GMP, unless the Treasury formally directs otherwise under the specific powers granted by section 59A of the Act.
(2) Where on the death of a spouse or civil partner a person becomes entitled to a guaranteed minimum pension in relation to a surviving spouse's pension or a surviving civil partner's pension, the amount by reference to which any increase is calculated for the purposes of article 3(2) must be reduced in accordance with section 59(5ZA) of the Act.
Article 4(2) addresses surviving spouses or civil partners who receive a GMP as part of their survivor's pension.
In this scenario, the basis for calculating their pension increase under Article 3(2) must be reduced according to the mechanism set out in section 59(5ZA) of the underlying Act.
9th March 2026
Taiwo Owatemi Gen Kitchen Two of the Lords Commissioners of His Majesty's Treasury
This signals the formal conclusion of the Order, noting the date signed and the authorizing signatures from two Lords Commissioners of His Majesty's Treasury.
EXPLANATORY NOTE
(This note is not part of the Order)
Under section 59 of the Social Security and Pensions Act 1975 (c. 60) (increase of official pensions) where the Secretary of State for Work and Pensions, under section 151(1) of the Social Security Administration Act 1992 (c. 5), directs that the sums in section 150(1)(c) of the 1992 Act are to be increased by a specified percentage, the Treasury must make an order to increase the rates in public service pensions. The Pensions (Increase) Act 1971 (c. 56) defines certain terms, sets out when a pension 'begins' and how the increase applies to lump sums.
The Explanatory Note confirms the legal basis: the Treasury acts under the Social Security and Pensions Act 1975 after the Secretary of State directs an increase based on inflation parameters in the Social Security Administration Act 1992.
It also notes that the Pensions (Increase) Act 1971 provides supplementary definitions and rules for applying these increases.
The increase to be applied is the same as the percentage by which the Secretary of State for Work and Pensions has, by direction under the Social Security Administration Act 1992, increased the additional pension entitlements accruing to employees in respect of earnings for service after 5th April 1978.
The percentage used for public service pension increases mandated by this Order mirrors the percentage increase directed by the Secretary of State concerning additional pension entitlements earned by employees for service completed after April 5th, 1978.
For pensions which began before 7th April 2025 the increase is 3.8 per cent. For pensions which began on or after the 7th April 2025 the increases (following the calculation set out in article 3) are as follows-
| Pensions beginning | Pensions increase | |------------------------------------------|---------------------| | 07th April 2025 to 21st April 2025 | 3.8% | | 22nd April 2025 to 21st May 2025 | 3.48% | | 22nd May 2025 to 21st June 2025 | 3.17% | | 22nd June 2025 to 21st July 2025 | 2.85% | | 22nd July 2025 to 21st August 2025 | 2.53% | | 22nd August 2025 to 21st September 2025 | 2.22% | | 22nd September 2025 to 21st October 2025 | 1.9% | | 22nd October 2025 to 21st November 2025 | 1.58% | | 22nd November 2025 to 21st December 2025 | 1.27% | | 22nd December 2025 to 21st January 2026 | 0.95% | | 22nd January 2026 to 21st February 2026 | 0.63% | | 22nd February 2026 to 21st March 2026 | 0.32% |
The note illustrates the specific annual increase rates for pensions originating after April 7th, 2025, showing a declining percentage—from 3.8% down to 0.32%—linked to the exact month the pension commenced, reflecting the pro-rata calculation detailed in Article 3(2)(b).
Article 3(3) of the Order provides for increases on certain deferred lump sums which become payable on or after 7th April 2025 and before 6th April 2026.
The note highlights that Article 3(3) specifically governs how deferred lump sums—those paid between April 7th, 2025, and April 6th, 2026—must also receive an increase adjustment based on the prescribed formula.
Article 4 of the Order sets out reductions to pension increases where a person is entitled to a guaranteed minimum pension deriving from an employment giving rise to the official pension. Where that is the case, the amount by reference to which any increase in the person's pension is to be calculated is to be reduced by an amount equal to the rate of the guaranteed minimum pension entitlement, unless the Treasury otherwise direct.
Article 4 mandates a reduction in the base amount used for calculating the pension increase if the recipient is receiving an increase on a Guaranteed Minimum Pension from the same employment, ensuring that the GMP component itself is not effectively being increased twice.
A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sector is foreseen.
The official note confirms that a detailed impact assessment was deemed unnecessary because this Order is expected to have no, or only a negligible, effect on the private, voluntary, or public sectors.