Sunak and Johnson at odds over state pension triple lock

Prime Minister, Boris Johnson, does not agree with Chancellor, Rishi Sunak’s, reported plan to potentially pause the state pension triple lock this autumn, according to The Times.

The report, which quoted a government source, stated that Sunak was keen to tackle the “anomaly” caused by the triple lock on state pensions in his autumn budget by temporarily suspending it, though Johnson is concerned about the impact such a violation of the Conservative Party manifesto would have on his support from older voters.

Sunak has publicly acknowledged the problems that could be caused by the triple lock before, last month telling the Treasury Select Committee: “Your committee on the triple lock has had evidence from others which has pointed out the anomaly in the way that it might work, depending on the very particular trajectory of earnings declines and the rapid rises over the next few years.”

However, the government source added that Sunak’s disagreement with Johnson had not become a “blazing row”, with the Chancellor having an online sales tax and capital gains tax hikes among his other options for bolstering Westminster’s finances.

The triple lock mechanism which is currently used to calculate state pensions ensures that they are guaranteed to increase by whichever is highest out of earnings growth, price inflation or 2.5 per cent.

With the coronavirus crisis having sent earnings into decline and inflation stuttering below 1 per cent, it is likely that the state pension will increase by 2.5 per cent next year before potentially benefiting from the sizeable increases in earnings growth which could accompany any post-pandemic economic recovery.

Consequently, Willis Towers Watson warned that triple locked state pensions could rise by as much as 21.3 per cent over a two-year period if there is a V-shaped economic recovery, making a sizeable dent in Westminster’s coffers.

Additionally, Aegon pensions director, Steven Cameron, pointed out that “temporary adjustments” could be made to the current system but urged the government to act “sooner rather than later” on the issue.

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