The Trades Union Congress (TUC) has issued a warning: by freezing the state pension triple lock, the government is set to strip nearly £500 a year from pensioners. This move comes at a time when households across the UK are already grappling with the most severe income squeeze since the 1970s.
The triple lock is a mechanism designed to ensure that state pensions do not lose value over time. It guarantees that pensions rise annually by the higher of three measures: the rate of inflation, average earnings growth, or a base rate of 2.5%. This year, the formula would have raised pensions by 8.3% in line with earnings growth. Instead, pensions will only increase by 3.1%, significantly less than needed to match the cost of living increases.
Financial Impact on Pensioners
The decision to abandon the triple lock will cost individuals on a full new state pension approximately £487 a year, and those on the full basic state pension about £373 a year. With rising prices, especially for essentials like fuel and food, this reduction in income could push many pensioners into poverty.
Call for Government Action
Frances O’Grady, the TUC’s general secretary, has criticised the UK for having one of the least generous state pensions in the developed world. She insists that the triple lock was a critical measure to lift pensioners out of poverty. Abandoning it amidst a cost-of-living crisis is particularly harmful, making it difficult for thousands of pensioners to stay financially afloat.
O’Grady argues that reinstating the triple lock is crucial, but she also calls for broader protective measures against rising living costs. The TUC urges the government to consider these steps as essential to prevent more households from falling into poverty.
Additional Proposals from the TUC
In response to the crisis, the TUC is advocating for several urgent actions from the government:
- Introduction of a Windfall Tax on Energy Companies: The TUC suggests imposing additional taxes on energy company profits. The revenue from these taxes should be used to fund energy grants for vulnerable households, covering increases in the energy price cap.
- Replacement of Government Loans with Grants: The union body criticises the government’s proposal of £200 loans to help with energy bills as inadequate. Instead, it proposes that these should be converted into grants that do not need to be repaid.
- Immediate Action Required: With the Chancellor’s spring statement looming, the TUC views it as the government’s last opportunity to rectify what they call a “broken promise” on the triple lock.
The Bigger Picture
The TUC’s recent analysis underscores a grim reality: record-high energy prices are likely to negate any pay rises this year, effectively reducing real income. This impact is felt most acutely by pensioners, who typically spend a larger portion of their income on essentials like heating and groceries.
As the cost of living continues to climb, the need for the government to step in and uphold the triple lock — alongside implementing additional financial supports — becomes increasingly urgent. Only through such measures can the financial security and well-being of the UK’s elderly population be safeguarded.