State Pensions are paid to those who qualify and are of pension age by the UK Government every four or so weeks. In April 2020 the amount given to pensioners was boosted, in line with the Government’s triple lock scheme.
The State Pension is a benefit which strives to make sure every person has the means for a retirement income.
For some people, the State Pension is only part of their retirement income as they may have money from a workplace pension, earnings or another pension.
In April 2020, state pensions increased by 3.9 percent, the biggest boost since 2012.
This was under the Government’s triple lock system, which some have called on to be scrapped amid coronavirus’ impact to the economy.
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How does the triple lock system work?
The triple lock system was put in place in 2010 by the then coalition government.
The system was introduced to make sure State Pension rates would increase in rate with inflation and wage growth.
Triple lock system guidelines stipulate the State Pension increases by the highest of one of three amounts each year.
This the highest of either growth in wages, inflation in regards to the Consumer Prices Index (CPI) or 2.5 percent.
The Government uses the CPI inflation rate from September and the three-month average of weekly earnings from July to determine how much State Pensions will increase.
Last month, State Pensions increased by 3.9 percent, matching the growth in average earnings UK workers saw in July 2019.
Will the triple lock system be abandoned?
There have been some critics of the triple lock system in recent years, and in recent weeks some have called on the Government to abandon the scheme entirely.
In April, think tank Social Market Foundation (SMF) found one potential way to spread the cost of coronavirus across all generations would be to get rid of the triple lock system.
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The SMF said any future austerity programme must not favour pension benefits over working-age welfare.
Scott Corfe, research director at SMF, said: “There is a clear case for intergenerational reciprocation when it comes to meeting the fiscal costs of the crisis – something that could be a feature of the policy landscape for years to come.“
However, charity Age UK has argued getting rid of the triple lock could make hundreds of thousands of pensioners worse off.
A staggering 700,000 people could fall into poverty by 2050 if the system scrapped according to estimates from the Pensions Policy Institute.
According to Andrew Tully, technical director at Canada Life, getting rid of the triple lock system would be seen as unfair, as pensioners would be a lot worse off in the future.
Mr Tully said: “Recent above-inflation increases to state pensions have been a very welcome boost for the many retirees who are looking to balance household budgets.
“However there has been much debate over recent years about the long-term sustainability of the triple-lock.
“There is a question of fairness, as the triple lock suggests pensioners’ income is growing faster than the rest of the population and spending on state pension has increased by more than other benefits.
“But we need to also recognise the UK state pension is not particularly generous compared to other nations.
“Any changes to the triple lock need to be well thought out and preferably have cross-party support so we have a sustainable long-term policy and people are clear how the state pension remains the bedrock of their retirement income.”
Whether or not the government will get rid of the triple lock system to stem the growing deficit triggered by coronavirus is unknown.
If the system is scrapped, the Government may face heavy criticism as previously, the Conservatives had pledged not to scrap the triple lock system in their election manifesto.
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