18 October 2023
If you are covering the impact of this morning’s inflation figure on the state pension and triple lock, please see the following comment from Jon Greer, head of retirement policy at Quilter:
“This morning’s inflation figure of 6.7% means that unless the government makes changes to how it calculates the triple lock, the state pension will rise by the earnings figure during the May to July 2023 period which was 8.5%. There is now a spotlight trained on the government’s next decision on whether to strip out bonuses and hand pensioners a lower state pension increase.
“Rumours have yet to be put to bed surrounding whether the government is considering excluding bonuses from the average earnings calculation for next year's uprating, which could mean that state pensions increase by 7.8% instead. This would save the government a significant chunk of change but would be undoubtedly unpopular. Using this lower measure of earnings would save the Treasury an estimated £900 million over the 2024/25 financial year. The government is set to confirm its approach later in the autumn when it confirms its annual review of benefit rates.
“Whatever decision the government makes, the triple lock continues to be a political hot potato and an area of pension policy that no government wants to meddle with as it typically will enrage a core voter base if it changed drastically.
“The level of increase given under the triple lock is often conflated with arguments on what the level of the state pension should be relative to mean full-time earnings. Arguably there should be agreement on the level of the state pension and separately a fair mechanism for ensuring its value is maintained overtime. Without such an approach each time the uprating of the state pension occurs a dividing line will be drawn setting generations against each other.”
