UK organisations are planning a median base pay rise of 2.5% for their next pay review — the third consecutive fall, down from awards of 3.7% two years ago, 3.0% last year and 2.6% this year. Half of all planned awards sit between 1.5% and 3.3% (lumi panel, n=214, August 2026).
Key findings
- The median planned pay rise for the next review is 2.5%; the interquartile range runs 1.5%–3.3% (n=214).
- Awarded increases have fallen every year since the peak: 3.7% → 3.0% → 2.6% at the median.
- One in ten organisations plans an increase of 0.2% or less; one in ten plans 4.5% or more.
- 84% run a single annual review; only 11% review pay more often than once a year (n=252).
What pay rise are UK employers planning for the next review?
The median planned or budgeted base salary increase across the panel is 2.5%. That figure describes the middle organisation, not the middle employee — each organisation reports the headline increase planned for its main population.
The spread matters as much as the middle. A tenth of the panel plans essentially no increase at all (0.2% or less), while the top tenth plans 4.5% or more — so "what is everyone else doing?" has a very different answer depending on which peers you mean. On the lumi benchmark the same figure is re-cut by sector and organisation size, which is where the useful version of this number lives.
How does that compare with recent years?
Planned awards continue the slide that started after the inflation peak. The same organisations report the typical increase they actually awarded in each of the last three review cycles:
| Review cycle | Lower quartile | Median | Upper quartile |
|---|---|---|---|
| Two years ago (awarded) | 2.7% | 3.7% | 4.5% |
| Last year (awarded) | 2.1% | 3.0% | 3.8% |
| This year (awarded) | 1.7% | 2.6% | 3.4% |
| Next review (planned) | 1.5% | 2.5% | 3.3% |
Two things stand out. The whole distribution is shifting down together — the upper quartile has lost more than a point in two years. And the gap between planning and awarding is small: this year's awarded median (2.6%) landed almost exactly where plans now sit for next year (2.5%), which suggests budgets, not optimism, are doing the talking.
How often do UK organisations review pay?
The annual review remains overwhelmingly standard: 84% of the panel run a single annual cycle. 7% review twice a year, 4% quarterly, and 5% have no regular cycle at all (n=252). For most organisations the number above is therefore a once-a-year decision — which is exactly why it gets benchmarked to death in the weeks before it's made.
What should a reward team do with this?
- Anchor the budget conversation on the range, not the median. A 2.5% headline hides a middle half spanning 1.5%–3.3% — where you sit inside that band is the actual decision.
- Re-cut before you present. An all-panel median is a starting point; the figure that survives a board meeting is the one for your sector and size band.
- Watch the floor. With a tenth of organisations planning near-zero awards, statutory movements (minimum wage, SSP reform) will bite harder at the bottom of the distribution than the headline suggests.
About these figures
Figures are medians and quartiles computed across the lumi benchmarking panel — a reference panel of UK organisation profiles modelled from graded published UK survey sources and calibrated metric by metric against lumi's anchor register, growing as member organisations contribute their own data. Each organisation reports one headline figure for its main population; comparisons are medians and percentiles, never averages, and any figure resting on fewer than 5 organisations is suppressed.
Sample sizes are stated per figure and were computed in August 2026. Read the full methodology.