What is the ‘triple lock’ for State Pensions?
Chancellor Jeremy Hunt has today announced the government’s tax and spending plans for the next 12 months.
Mr Hunt, said the government’s economic plans are working ‘but the work is not done’ in his speech in the House of Commons.
He said: ‘After a global pandemic and energy crisis, we have taken difficult decisions to put our economy back on track.
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‘We have supported families with rising bills, cut borrowing and halved inflation.
‘Rather than a recession, the economy has grown. Rather than falling as predicted, real incomes have risen.
‘Our plan for the British economy is working. But the work is not done.’
Among the announcements by the Chancellor, he said the state pension will increase by 8.5% from April 2024 to £221.20 a week. This will mean the government will honour the triple lock ‘in full.’
But just what is the triple lock pension, and what will happen to it?
Here is everything you need to know.
What is the triple lock pension?
The triple lock is a commitment that state pensions would rise by whichever was the largest of three figures – annual inflation, average earnings rises, or by 2.5%.
With this in mind, pension recipients could have expected a rise of more than 10% in their weekly payments next year as inflation reaches new highs – especially useful in times of post-pandemic uncertainty.
What has previously happened the Triple Lock?
In September 2021, the former Department of Work and Pensions minister, Therese Coffey, announced a temporary suspension of the triple lock and that the government would decide on pensions based on annual inflation or by 2.5%.
Although the concept of a triple lock pension was a part of the Conservatives’ manifesto, the choice not to consider annual earnings was made to prevent those who were expecting to receive a pension ‘unfairly benefitting from a statistical anomaly’.
However, the triple lock returned last year.
What will happen to the Triple Lock?
Amongst the economic chaos that followed the mini-budget, there was much speculation on the pension triple lock, with much former Chancellor Kwasi Kwarteng’s economic plans ripped up by new Chancellor Jeremy Hunt.
However, it was confirmed by the Chancellor that the triple lock will remain in place.
The Autumn statement itself states: ‘The State Pension will be uprated by inflation, in line with the commitment to the Triple Lock.’
‘The standard minimum income guarantee in Pension Credit will also increase in line with inflation from April 2023 (rather than in line with average earnings growth).’
‘This will ensure pensioners on the lowest incomes are protected from inflation and do not lose some of their State Pension increase in the Pension Credit means test.’
What is the current state pension worth?
The full, ‘new’ current flat-rate state pension (for those who reached state pension age after April 2016) is £185.15 a week.
The full, ‘old’ basic state pension (for those who reached state pension age before April 2016) is £141.85 per week.
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