DWP state pension triple lock alert as key metric used to increase pots comes under fire | Personal Finance | Finance
The future of the triple lock as we know it has been called into question as an MP has put forward the idea of tweaking the system to provide a two- or three-year average increase for state pensioners.
Nigel Mills MP spoke in the House of Commons about the difficulty that under the current rules, the state pension can rise by a large amount twice in two consecutive years, rising in line with high inflation and then rising in line with earnings as they catch up the next year.
The state pension increased 10.1 percent last year, rising in line with high levels of inflation, while the average earnings metric will be used for this year, providing another sizeable 8.5 percent pay increase.
Mr Mills asked pensions minister Paul Maynard: “Does the minister think that a rolling two- or three-year average would fix that? Because if that’s the price of making triple locks safe for the long term, I would pay it.
“I wouldn’t choose it, but if that stops this uncertainty about this whole thing being affordable, it would be better.”
Mr Mills dismissed speculation the triple lock is becoming unsustainable saying it is “utterly impossible” the rise in the state pension will not be linked to inflation or the rise in average earnings going forward.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “We’ve reached an important point in this debate.
“The triple lock has boosted state pensions, but the fact remains many pensioners remain in poverty while state pension costs spiral.
“A review of state pensions, and the triple lock’s role within it, is urgently needed to deliver a system that delivers certainty for pensioners now and in the future.”
With the 8.5 percent increase, the full basic state pension going up from £156.20 a week to £169.20 a week, while the full new state pension is going up from £203.85 a week to £221.20 a week.
As claimants get their payments in four-week instalments, this means the full basic state pension will go up to £678 each pay period while the full new state pension will pay £884.80.
State pension payments are increasing from April 8, after the new tax year begins on April 6, when benefits will increase 6.7 percent.
The triple lock guarantees payments go up each year in line with the highest of inflation, the rise in average earnings or 2.5 percent.
You can check how much state pension you are on track to receive using the state pension forecast tool on the Government website.
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