The triple lock raises the state pension by whichever is higher out of the rate of inflation, average earnings or 2.5 percent. Last year, it was temporarily suspended due to the Government’s furlough scheme impacting wages. However, politicians have promised its return despite the apparent hesitancy from the new Prime Minister Rishi Sunak.
The Consumer Price Index (CPI) rate of inflation for September is often used to determine the rate of a state pension increase.
As it stands, inflation has returned to a record 40-year high of 10.1 percent as the cost of living crisis continues.
If the triple lock were to be reinstated, the full new state pension would rise to £203.85 per week.
This would result in the payment reaching £10,600 per year, which would take it above the £10,000 benchmark for the first time.
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Prior to both leaving the highest office in the land, Boris Johnson and Liz Truss restated their commitment to the triple lock.
Despite this, Rishi Sunak has appeared more hesitant to clarify his position on the issue and has passed it over to his new Chancellor Jeremy Hunt.
Mr Hunt is due to provide Parliament and the country with an updated fiscal statement on November 17, 2022.
It is believed he will introduce cuts to public spending, tax rises and provide clarity on the payment increases for benefits, including the state pension.
Jason Hollands, the managing director of Bestinvest, shared his confusion over the Government’s ambiguity regarding the triple lock.
Mr Hollands explained: “When assuming the office of Prime Minister Rishi Sunak said he was committed to the 2019 manifesto.
“Alongside pledges not to raise income tax, National Insurance and VAT, that manifesto also committed to the state pension ‘triple lock’.
“This means the state pension is set to rise by 10.1 percent from next April, at a cost of about £10billion to the Exchequer – which illustrates the steep budgetary cost of maintaining this pledge.”
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The reason for the triple lock’s recent suspension was due to average earnings being artificially inflated during the pandemic.
While wages have dropped, inflation has soared and Mr Hollands believes another suspension is not out of the question.
He added: “It is far from sacrosanct, however, having already been suspended last year, when anomalous pay increases caused by the UK emerging from Covid lockdowns meant that pensioners received a 3.1 percent raise – well below the 8.3 percent increase in average wages.
“Apart from the fiscal burden, the lock is seen as intergenerationally unfair in some quarters; while opposing views point to the comparatively stingy level of state-funded retirement income in the UK compared to peer nations.
“It seems unlikely that the Tories, lagging Labour by a huge gap in the polls, will target a measure that would leave them facing accusations of betrayal from core voters.
“However, a hard-pressed Chancellor could argue the 10.1 percent inflation in September is also an anomaly, and water down the lock again for a year while pledging to reinstate it the following year, before an election.”