The triple locking mechanism ensures the state pension sum increases each year by the greater of: 2.5 percent, inflation or average earnings. It was temporarily suspended this year in favor of a double lockdown due to distorted earnings data following the COVID-19 crisis.
However, the return of politics in the next financial year has delighted retirees, many of whom are banking on a bumper boost given double-digit rates inflation.
As Tory politicians pledged their commitment to politics for the rest of Parliament, one pundit has warned the future of the triple lockdown could be in jeopardy.
Tom Selby, head of pension policy at AJ Bell, said: “The triple lock appears to be under constant threat, in part because the wild economic ride we’ve had in recent years has inflated the costs associated with improving of the State Pension.
“The government’s commitment to this commitment proved to be very thin when average incomes in the three months to July 2021 – the figure generally used for the following year’s triple lockdown – exceeded eight per cent.
Mr Selby continued: ‘It is undoubtedly a decision partly designed to present members of the Conservative Party with clear blue water between her and the man who played a central role in the decision to abandon the triple lock.”
Despite serving as chancellor when the triple lockdown freeze was implemented, Mr Sunak championed the return of politics before leaving his post at the Treasury.
Criticism has been leveled at its reintroduction as many workers rely on real pay cuts due to inflation.
However, Mr Selby once again highlighted the potentially substantial increases to the state pension under the triple lockdown.
This could call into question the viability of the policy for whoever becomes prime minister.
The expert continued: ‘Assuming the triple lockdown stays in place, pensioners could receive a huge boost to their earnings next year.
“The September inflation figure will be one to watch, with the Bank of England predicting a peak of 13% later this year.
“If it reached 13% in September, the basic state pension would increase from £18.45 to £160.30 a week (£8,335.60 a year) in April 2023.
“While the new state pension would increase from £24.10 to £209.25 a week (£10,881 a year).
“It could cost the Treasury well over £10billion – a huge price to pay for the keys to Number 10.
“Also, it’s not a one-time cost – it would accrue to the Exchequer every year.”
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