For the 12.5 million retirees in the UK, the triple lock system is a big deal. Here’s why: it guarantees that the state pension increases each year by either the rate of inflation, average wage growth, or a minimum of 2.5% – whichever is the highest. This system has been boosting pensioners’ income since 2010, helping them cope with rising costs of living, from groceries to fuel. The Daily Mail looked at its potential future as a General Election grows closer.
In April 2023, thanks to soaring inflation, retirees saw a record 10.1% increase in their pensions. Sounds great, right? But, maintaining this system isn’t cheap. Raising the state pension by just 1% adds a hefty £900 million to the government’s bill, according to financial experts at Canada Life.
Election Impact on Pensions
With a General Election expected this year, the future of the triple lock is uncertain. Both the Conservative and Labour parties haven’t disclosed their plans yet, but they’re under pressure to reveal their intentions. Pension experts like Steven Cameron from Aegon and former pensions minister Steve Webb suggest that the triple lock is too important for voters to be easily discarded. However, Helen Morrissey from Hargreaves Lansdown is less optimistic, noting that many doubt the system’s sustainability.
Regardless, Chancellor Jeremy Hunt has confirmed an 8.5% state pension increase from April 6 this year. That’s a rise to £221.20 a week for the new full state pension and £169.50 for the old basic state pension.
If the triple lock does change post-election, what could replace it? Ros Altmann, another former pensions minister, suggests a ‘double lock’ model, eliminating the 2.5% minimum increase. She also calls for a more comprehensive review of the pension system to make it fairer. For instance, not all components of the old state pension benefit from the triple lock, and the poorest pensioners relying on Pension Credit don’t get these increases.
Other Options on the Table
Given the growing costs (a whopping £124.3 billion and rising), the government might consider other measures. One is raising the state pension age, set to increase to 67 between 2026 and 2028 and potentially 68 sooner than the planned 2044-2046 period. But this raises concerns about fairness, especially for those in poorer health or unable to work longer.
Alternatively, the government could keep the triple lock, acknowledging its benefits despite its flaws. The UK’s state pension is less generous compared to other developed countries, and maintaining the triple lock sidesteps the tough question of setting the appropriate pension level.
The triple lock has been a cornerstone of financial security for UK retirees, but its future is now in the hands of the upcoming election results. Will it continue to shield pensioners from inflation, or will a new system take its place? Only time will tell. Stay tuned for more updates as the election draws near and the fate of the triple lock unfolds.