State pension triple lock ‘may still be scrapped

Hunt’s move in last week’s autumn statement will give 12.4million state pensioners a pay rise of 10.1 percent in the 2023/24 tax year. After that, everything will be up in the air again, a pensions expert warns.

The new state pension will see its biggest ever increase to £10,600 for those who get the maximum amount, although the basic state pension will only pay at most £8,121.

This increase came as a huge relief after the Government suspended the triple lock for the current financial year, despite it being a Conservative Party manifesto commitment.

As a result, pensioners got a pay rise of just 3.1 percent in April 2022, while inflation is now running red hot at 11.1 percent.

Under the triple lock, the state pension rises by either earnings, inflation or 2.5 percent, whichever is highest.

While Hunt restored the mechanism last Thursday, a financial analyst has warned he has only done so for one tax year.

After that, nobody knows what will happen.

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That means that once again, pensioners do not know if the triple lock will be there for them in future.

This uncertainty will leave millions of pensioners in limbo, wondering whether their incomes will keep up with prices and inflation over the longer run.

Megan Jenkins, partner at wealth management firm Saltus, says while the triple lock restoration will come as welcome news, nothing is guaranteed.

Next year’s triple lock increase will cost HM Treasury almost £10billion, and the bill will only climb as the population grows older.

Jenkins warned: “This means the same commitment may not be made next year.”

She said everybody has good reason to support the triple lock: “Not only the large number of pensioners who rely on their state pension, but also those looking to retire in the next few years.”

READ MORE: State pension to hit £10,600 but older pensioners get £2,500 less

The state pension’s purchasing power is still diminishing as energy and food prices rise at an ever faster rate than 10.1 percent.

Yet Hunt and Prime Minister Rishi Sunak were clearly in two minds over whether to restore the triple lock for next year. 

Sunak only committed to the mechanism lock after a successful campaign by the Daily Express to protect the nation’s embattled pensioners.

However, that commitment has not stretched to April 2024, Jenkins warned. “The last couple of years, particularly the last couple of months, have taught us that things can change quickly, and nothing is guaranteed.”

The Treasury has good reason to change track next year. “Fulfilling the triple lock on state pensions will come at a significant fiscal cost,” she said.

The state pension eats up around 12 percent of all government spending, and is not funded by a ring-fenced pot of savings.

Instead, the bill is paid by today’s workers, from their income tax and National Insurance contributions.

Many pensioners believe they are entitled to receive the state pension but instead it is a benefit, as recently reported.

This gives the government the freedom to cut payments whenever it wishes, and dooms pensioners to constant insecurity.

Inflation is forecast to be 7.4 percent next September, which is the monthly figure that applies when setting the triple lock.

Passing on that increase could cost the Treasury another £8billion a year.

Jenkins said this huge sum “begs the question as to whether the same could be committed to next year”.

As yet, we do not know, and neither Sunak nor Hunt are saying. This leaves pensioners facing an anxious wait… again.

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