State pension triple lock explained as increase to be at least 5.5% – element ‘locked in’ | Personal Finance | Finance


The triple barring is a government policy to ensure the state pension increases each year in accordance with one of three elements. Payments must increase each April by either 2.5 percent of the income growth rate or the inflation rate, whichever is greater.

The policy was suspended last year as earnings growth disproportionately rose 3.1 per cent amid the impact of the coronavirus pandemic.

Now, ONS wage growth figures showed that workers’ average wages rose 5.2 percent from May to July and 5.5 percent for those on bonuses.

However, the rising inflation rate is more likely to determine the increase in the statutory pension, which recently fell to 9.9 percent after 10.1 percent in July.

Kate Smith, Head of Pensions at Aegon, said: “The Government has previously committed to reintroducing the triple lockdown after suspending the income element for 2022-23 due to distortions caused by the Covid-19 pandemic.

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“With double-digit inflation, average earnings (total wages) of 5.5 percent are unlikely to be the driving factor behind April’s public pension increases.

“The state pension is expected to roughly double at over 10 percent, confirms the September inflation figure to be released next month.

“While Prime Minister Truss has pledged to reintroduce the triple ban in the immediate term of office during her leadership campaign, questions will remain about its affordability and whether the triple ban will survive in its existing form on all parties’ platforms ahead of the next general election. ”

The consumer price index for the year to September is typically the figure governing the triple lockdown of the state pension announced in October.

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The new state pension is currently £185.15 per week, while the basic state pension is £141.85.

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If inflation hits 10 per cent again, the new state pension would rise to £203.85 per week and the basic state pension to £156.20 per week.

The Bank of England forecasts that inflation will hit 13 per cent in October and if inflation stays high next year the next government pension increase could also be sizeable.

A Canada Life survey found that 55 percent of adults retain triple locking as of today.

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This is divided into 78 percent approval among the over 55 year olds, 44 percent among the 35 to 54 year olds and 33 percent among the 18 to 34 year olds.

ONS figures show the number of employed people aged 65 and over rose by a record 173,000 in the three months to June 2022.

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The group said nearly 1.5 million people aged 65 and over are in the workforce, setting a new record.

Researchers said a “record increase” in the number of older workers between April and June 2022 was due to the increase in the number of part-time workers.

Jon Greer, Quilter’s head of retirement policy, warned that the state pension may not be a viable policy in the years to come.

He said: “Truss will struggle to balance the books if she is to stay true to the Tory manifesto of keeping the triple lockdown for years to come, given rising inflation and her desire not to add more taxes and cut existing ones.

“This will ultimately call into question how the upcoming welfare reforms will be funded. Something may have to give.

“Pensioners across the country will be hoping the triple lockdown doesn’t kick off.”





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