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What is ‘Triple Lock’ and what does it mean for pensioners in North and North-East?
What is the main problem?
According to the latest data, inflation reached a 40-year high in September.
An increase in the cost of daily food and commodities was a major contributor, bringing inflation down to 10.1% for September.
The September inflation figure, at 10.1%, would normally be part of the calculation of how much pensioners get, with fears that it is no longer affordable for taxpayers to maintain it.
Prime Minister Liz Truss has previously said she is committed to a triple lockout.
While there have been signs that ministers may drop the commitment, new Chancellor Jeremy Hunt is exploring ways to plug a multi-billion-pound black hole in the wake of turmoil following the mini-budget.
If the triple lock is released it is estimated that pensioners will lose an estimated £22,000 over several years.
There are 981,399 Scots who receive a state pension.
What is ‘Triple Lock’?
The triple lock was introduced into the UK state pension in 2010.
The triple “lock” assured state pension would be the biggest increase among these three measures:
- Average yield
- Inflation as measured by the Consumer Price Index (CPI)
- 2.5%
This means that pensions paid will increase with the income of those working or with the cost of living as per the September inflation data.
Why would eliminating triple lock be controversial?
Politically, it could do more damage, following a string of recent policy U-turns. It was a conservative manifesto pledge and its previous suspension was seen as a one-off due to the distorting effects of the pandemic.
Breaking the promise will affect some of the most vulnerable in society, many of whom live on fixed incomes, as high inflation wreaks havoc with the household budget.
While some might argue about “inter-generational fairness”, many working-age people receive salaries that are well below the current rate of inflation.
If the pension is based on income in the next April instead of inflation
If increased accordingly, what will be the impact on cash terms?
If the pension was increased by 5.5%, the weekly new state pension would be £195.35 per week, corresponding to income. But if it rises in line with consumer price index (CPI) inflation, at 10.1% it will be £8.50 a week higher, at £203.85.
This would add up to a difference of £442 in pensioners’ pockets over the course of a year.