Today’s Consumer Prices Index (CPI) inflation reading of 6.7% has confirmed that the State Pension Triple Lock uprating will be determined by earnings at 8.5% come April next year.
Making it the second-largest State Pension increase ever and would see the new State Pension increase by £901.02 to £11,501.22 (€13,268.96, $14,024.59) a year.
Which breaks down to £221.20 per week a £17.35 weekly increase.
Following this news Prime Minister Rishi Sunak and his government must decide whether to implement this 8.5% increase next April or suspend the Triple Lock.
Stephen Lowe group communications director at Just Group, commented: “There is recent precedent for suspending the Triple Lock when the government said the pandemic had distorted wage growth and chose the lower inflation figure to apply to the 2022/23 State Pension.
“The Prime Minister must now weigh up his party’s manifesto commitments, the state of the nation’s finances and his chances of success in a coming General Election before making a decision which is expected to be announced in the Autumn Statement. It won’t be an easy choice, especially for a Conservative government whose party has traditionally relied heavily on older voters.”
See also: State pension triple lock could cost £9bn next year
Steven Cameron pensions director at Aegon, said: “While an 8.5% increase would be welcome news for State Pensioners’ purchasing power, it would do little to quieten the growing concerns that the Triple Lock in its current form is unsustainable longer term.
“With the burden on current workers who pay for the State Pension through National Insurance increasing sharply, even if the Government refrains from fiddling with the figures this time round, today’s inflation figure will only amplify calls for whoever is in power after the General Election to review the Triple Lock to make it intergenerationally fair.”
Future of the Triple Lock
When looking at the future of the triple lock Patrick Thomson head of research and policy at Phoenix Insights pointed out that the government need to consider how much people are paid through the State Pension and what age they will receive it.
He said: “Our polling for Phoenix Insights found the vast majority of adults (87%) believe the state pension is there to ensure everyone has a minimum level of income in retirement.
“Uprating payments via the triple lock has meant retirees’ income has kept pace with or exceeded rising prices and wages. However, its affordability has come into question following a period of higher inflation and stronger wage growth.
“Bringing forward the increase in the state pension age may be an alternative lever the government opts to pull to combat the affordability challenge. But any acceleration in the state pension age timeline needs to be coupled with further support for those most at risk financially and those least able to remain in work.”
