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UK pensions triple lock to make a comeback… for now

But ‘many pensioners face a difficult squeeze on their cost of living for the next 12 months’

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Work and pensions secretary Therese Coffey has confirmed that the UK government remains committed to the state pension triple lock for the rest of this parliament.

This comes after the UK government temporarily moved to a ‘double lock’ of the higher of price inflation or 2.5%, excluding earnings inflation from the April 2022 increase, because of pandemic-related distortions in national average earnings.

Under the triple lock, the state pension rises annually at the highest of earnings inflation (total pay for three months to July), price inflation (September CPI figure) or 2.5% a year.

During a House of Commons debate on 21 March 2022, Coffey confirmed the UK government’s commitment to after a Labour frontbencher asked whether the “triple lock will be honoured for the rest of this parliament”.

She replied: “The right honourable gentleman asked multiple questions earlier and I answered at least one of them, but the answer is yes, I do make that commitment.”

Relief

Many Brits were left severely disappointed when the government broke their manifesto commitment and temporarily replaced the pension triple lock with a less generous ‘double lock’, meaning the state pension will rise by 3.1% this April, far below the current inflation rate which was sitting at 5.5% last month, with an updated figure due during the Spring Statement on 23 March 2022.

Pensions firm Aegon said that pensioners “will be relieved by latest commitment to reinstate state pension triple lock but face a difficult 12 months” due to rising prices and rocketing energy bills.

It added that the triple lock rise could be big next year as inflation is predicted to reach over 8% for April 2023.

‘Difficult squeeze’

Steven Cameron, pensions director at Aegon, said: “Renewed commitment from the government to the state pension triple lock will offer some reassurance to state pensioners.

“The latest commitment is to be welcomed, meaning the increase in April 2023 and later years of this parliament will be the highest of earnings growth, inflation or 2.5%. Anything less would have been met with pensioner outrage. But it still means many pensioners face a difficult squeeze on their cost of living for the next 12 months.

“Looking ahead, there’s a good chance that state pensioners will be in for a bumper increase in April 2023. The Bank of England’s latest prediction is that inflation might reach 8% in the Spring and could be even higher later in the year.

“The April 2023 increase will include inflation till September 2022, which could then be near its peak of 8% or above. The triple lock will pay this, or even more if earnings growth is higher again. Without any government tinkering, this could put state pensioners on target for a bumper 8% plus increase in 2023, potentially the highest increase ever, compensating for the relatively low increase this April.

“However, a year’s a long time to wait to ‘catch up’ and unfortunately, some of our elderly might not live to see the increase. Tomorrow’s mini-Budget presents one last chance for the Chancellor to offer further temporarily support for state pensioners. One approach would be to offer a higher state pension increase this April in return for a lower rise next April.”

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