Earlier this year, former Chancellor Rishi Sunak announced that the triple lockdown would be reinstated next year to help older people cope with a rising cost of living. Experts report that a person’s annual income in state pension will be £10,590.32. It will be the first time the state pension has topped £10,000 and comes amid the current cost of living crisis.
The triple lock is a promise by the government to increase state pension payments either according to the average rate of pay, inflation or 2.5%; whichever is the highest.
It was temporarily suspended due to the artificial inflation of average incomes during the pandemic.
Following the suspension, the state pension rate only increased by 3.1% last year, in line with inflation from September 2021.
However, inflation currently stands at 9.4%, its highest level in 40 years, and is expected to exceed 13% in the coming months.
The rate at which state pension payments will likely be announced in the fall, at which point inflation appears to be around 10%.
This means that state pensioners will likely get a “heavy pay rise” at around that rate of inflation.
Ed Monk, associate director at Fidelity International, explained how older Britons have been affected by the lifting of the triple lock over the past year.
Mr Monk explained: ‘It turned out to be a costly decision for retirees, even though there was reasonable logic behind it – no one believed wages were really rising by 8% a year ago.
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“This time around, any refinement of the triple lock would be even less tolerated.
“The government has already promised to reinstate the triple lockdown before the start of the current leadership race, but now the candidates leave us in no doubt that they will give pensioners a big pay rise.”
Currently, the UK is waiting to see who will be the country’s next Prime Minister as Mr Sunak and Liz Truss fight in the Conservative Party leadership election.
The issue of the triple lockdown was raised during the election campaign, with Ms Truss pledging to reintroduce it to boost state pensions, which Mr Monk believes is important.
He added: “In particular, Liz Truss has promised to commit to triple lockdown for the next three years.
“This is particularly important given the Bank of England’s latest forecast this week that inflation is likely to remain close to today’s high levels a year from now.
“The increase is certainly justifiable on the grounds that retirees include some of the most financially vulnerable people in society, and many will already struggle to meet the costs of soaring heating and food bills.”
Finance has broken down how much someone on state pension would get per week if the triple lockdown were to be increased by 10%.
“In cash terms, a 10% increase would raise the state pension (which applies to anyone who started claiming after 2016) from £185.15 to £203.66 a week,” said Mr. Monk.
“It would also bring the annual income from a full state pension to £10,590.32 – the first time the payment has been worth more than £10,000 a year.
“This is going to be vital in helping those who rely solely on their state pension, but it is important even if you plan to have other retirement savings to draw on.
“The public pension is particularly valuable because the income it provides is guaranteed and – if promises are kept – at least increases with inflation each year. This is a valuable benefit that is difficult to replicate from other types of pension income.
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