TRIPLE LOCK SET ASIDE

State Pension is still the bedrock of many pensioners’ retirement income

The earnings benchmark of the State Pension triple lock has been temporarily set aside for this year. e Department for Work and Pensions (DWP) con rmed on 7 September 2021 that the State Pension triple lock rule has not been applied for the current 2022/23 nancial year over concerns of the potential costs involved.

It comes a er the O ce for Budget Responsibility (OBR) said in July last year that pensioners could see their payments rise by as much as 8% due to the guarantee. e triple lock guarantees that pensions grow in line with whichever is highest out of earnings, in ation or 2.5%.

WHAT IS THE TRIPLE LOCK FOR PENSIONS?

e triple lock has been a core commitment of every government budget since 2010, when it was announced by the Coalition Government made up of the Conservatives and the Liberal Democrats. It was a response to the fact that the real value of the State Pension had fallen, and it looked to guarantee that this vital state bene t would continue to rise every year.

e ‘triple lock’ refers to the idea that the State Pension rises in line with the highest of these three measures every year:

Average earnings growth (measured from May to July each year) In ation (measured in the year from September every year)

is annual rise is applied to the basic State Pension as well as the new State Pension (for people retiring a er 2016). e government uses it to make sure that people’s retirement bene ts keep pace with the rising cost of living.

BEDROCK OF MANY PENSIONERS’ RETIREMENT INCOME

Understandably pensioners are disappointed that the triple lock has been removed for this year, as the State Pension is still the bedrock of many pensioners’ retirement income. Women and those who are self-employed are among those who will be particularly a ected by the temporary scrapping of the triple lock, as they are more likely to rely on the State Pension in retirement.

However, it is encouraging that the government hasn’t abandoned its longerterm commitment. e 2.5% minimum rate has been used on a number of occasions, and is having the e ect of slowly increasing what people receive in real terms. e long-term trajectory of the State Pension will also be more important to younger people, more than a one-o hike in line with earnings this year.