Govt commits to triple lock for rest of current parliament after 2022/23

The government remains committed to keeping the state pension triple lock for the rest of the current parliament once it is reinstated following this year’s suspension, the Work and Pensions Secretary, Therese Coffey, has announced.

The announcement comes after the government made the temporary move to a ‘double lock’ of the higher price of inflation or 2.5 per cent, excluding earnings inflation, for the April 2022 increase because of pandemic-related distortions in national average earnings.

Aegon pensions director, Steven Cameron, said that although the reinstation of the state pension triple lock was to be welcomed, many pensioners will still face a “difficult” 12 months under the below-inflation increase in April 2022.

Cameron continued: “Renewed commitment from the government to the state pension triple lock will offer some reassurance to state pensioners.

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

“This is already at its highest level for 30 years and widely expected to rise further. This is sending a chill through pensioners, many of whom are already struggling with rising prices and facing rocketing energy bills.

“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 per cent.

"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 per cent 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 per cent or above. The triple lock will pay this, or even more if earnings growth is higher again.”

Cameron noted that, without any government tinkering, this could put state pensioners on target for an 8 per cent 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,” he added.

“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.

“For example, he could raise this year’s increase by 2.5 per cent to 5.6 per cent, but then pay 2.5 per cent less than whatever the triple lock rise would have been next April. If as is being predicted price inflation were 8 per cent next September, and if this were above earnings, state pensioners would still receive 5.5 per cent next April.

“While this would come at a cost to the Chancellor for the coming tax year, it would be financially neutral in later years as the state pension from April 2023 would be the same as it would have been.

“But in the meantime, state pensioners would have benefitted from an extra 2.5 per cent or around £4.50 a week for someone on the full state pension. The Chancellor has a hugely difficult task of offering support in the current cost of living crisis and pensioners are one group who need particular attention.”

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