The government has confirmed that increases to the State Pension via the Triple Lock have been suspended for 1 year. The link to earnings inflation has been suspended meaning that for this year, there is a double lock i.e. pensioners will receive an increase in their state pensions based upon the higher of 2.5% or inflation in September.
What is the triple lock?
This is a guarantee by the government to ensure that pensions keep up with income when compared to inflation or average earnings increases. The Triple Locks means that pensioners receive state pension increases based upon, the higher of Earnings inflation, consumer prices inflation or 2.5%. The earnings inflation link (given that it is over 5% pa at present) has been removed for 1 year.
We believe, this is the first in a series of changes to benefits, taxation and national insurance contributions to create additional revenue for the government or cut spending given covid-19 and our debt position. Before pensioners and other commentators start ‘moaning’, we should all remember that we are in this together, we must all tighten our belts over the coming years to pay back covid-19 debt but be thankful that the government has committed to reinstating the triple lock next year.