State pension triple lock: What it is, why it matters and could it be gone forever?

Sturgeon says the removal of the triple lock is 'disgraceful'

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The triple lock has been suspended for the 2022 to 2023 financial year, affecting how much the state pension amount is increased by next month. Instead of a potential eight percent increase in line with wage earning increases last year, it will instead be rising by 3.1 percent aligned with CPI in September 2021.

State pension will increase next month, with the new state pension rising from £179.60 to £185.15 per week.

The basic state pension will increase from £137.60 to £141.85, but both are far from what pensioners could have been receiving if the triple lock had stayed in place.

Triple lock is a policy commitment first introduced in 2010, which promised to increase state pension every year by the largest of three figures:

  • Average earnings growth
  • Inflation
  • 2.5 percent.

It was intended that the triple lock would prevent state pension payments from being eroded in real value.

However, the unprecedented economic impact of the COVID-19 pandemic saw the Government temporarily suspending the mechanism, replacing it momentarily with the double lock now in place.

The double lock ensures state pension will rise by the largest figure between inflation and 2.5 percent.

This was said to be due to the irregularities seen with average earnings growth during the pandemic as a result of the furlough scheme.

When people were placed on furlough they were generally earning less, but as they came off furlough and returned to normal pay, the average earnings increased by an estimated eight percent from May to July 2021.

If the triple lock had remained in place, pensioners would see their income increased by this percentage in April.

The Government has reportedly noted that the suspension is temporary and the triple lock will return.

Officially, the commitment to the mechanism only lasts until the end of the current parliamentary term, which is 2024.

Age UK, a charity for older people, has been outspoken about the suspension and urged the Government to reinstate the triple lock as soon as possible, sharing: “Age UK remains a strong supporter of the triple lock because it sustains and, in some years, increases the relative value of the State Pension, protecting the incomes of current and future pensioners.

“The State Pension is the largest single source of income for most pensioners. However, too many older people do not receive enough through their State Pension to live decently in retirement.

“We regularly hear from older people who struggle to get by on their State Pensions and would be badly impacted were the value of their pensions to fall.”

Understandably, the suspension of the triple lock has worried many pensioners and those approaching the state pension age, which is also a growing concern.

As life expectancy in the UK increases, so does the state pension age which is kept under review.

Currently the state pension age is 66 for both men and women and is expected to start increasing again from 2026.

By 2028, Age UK reports that the state pension age will reach 67, meaning those approaching state pension age may need to budget for an extra year or two before dipping into their retirement savings.

Currently roughly 60 percent of UK welfare spending goes towards pensioners but as the life expectancy rises, as well as the state pension age, this could likely increase.

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