State pension misery as triple lock will be axed – what does this mean for you?

Dr Shola says ‘leave pensioners alone’ in housing debate

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The Government previously suspended the triple lock guarantee, putting a double lock in place which saw pensioners lose out on a potential eight percent increase in line with wage growth. Under the double lock pensioners will be hard stretched to beat an expected four percent inflation rate as they receive a meagre 3.1 percent increase.

The Government’s decision was under the scrutiny of both the public and the House of Lords, with neither of them liking the outcome of the double lock. 

The House of Lords proposed their amended triple lock to the House of Commons yesterday. 

The amendments would see government raising state pension around five percent, using the Office of National Statistics’ findings on recent wage growth. 

The triple lock was implemented as a guarantee that state pension would increase to match the highest between inflation, wage growth or 2.5 percent. 

Its suspension was reasoned with the fact that in the past 12 months there has been unprecedented economic turbulence causing inflated and unrealistic statistics. 

Pensioners stand to lose over £100 next year as their income increases with the double lock, guaranteeing the highest between inflation or 2.5 percent. 

The recently announced 3.1 percent rise for next year’s state pension is supposedly aligned with the rate of inflation. 

However, rising inflation and predictions announced by the Bank of England show that this increase will likely not be enough to help pensioners stay afloat. 

And as the cost of living crisis looks to continue long after the pandemic, many feel betrayed and abandoned by the promise of the triple lock. 

The House of Lords took all of this into account for their proposal but still came out the other side empty handed. 

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown commented: “The House of Lords’ proposed changes to keep the state pension triple lock were rejected in the Commons but not without a lot of drama along the way. 

“There were fiery exchanges between the pension minister Guy Opperman and a number of MPs including the head of the Work and Pensions select committee Stephen Timms, who argued that pensioner poverty is already on the rise and that even a one-year break in the earnings link risks long-term damage.”

She continued: “While an 8.3 percent increase in the state pension looks generous in the wake of earnings figures distorted by the pandemic it’s also fair to say the alternative of 3.1 percent offers little comfort in the face of rapidly rising inflation. 

“The suggestion that an earnings figure could be used that strips out the distorting impact of the pandemic was rejected by the pension minister who said it was difficult to find a figure that was sufficiently robust.

“This triple lock has been in place for a decade and has played a role in boosting the state pension, but the current situation has exposed its flaws. 

“If it can be frozen and tweaked now, then it can be done so in the future.  The time has come to take a wider ranging look at state pension and the triple lock’s role within it.”

The full new state pension is currently £179.60 per week, and with the 3.1 percent rise recipients will receive £185.17 per week next year. 

With the current 3.1 percent rise the full basic state pension will also see a £4.27 rise, going from the current £137.60 to £141.87. 

While this would see pensioners income increase by roughly £200 per year, they will be losing out an additional £169 due to watering down of the triple lock. 

The triple lock was implemented as a political promise to guarantee a state pension rise equal to the highest of either earnings growth, inflation or 2.5 percent. 

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