12 September 2023
If you are covering the latest UK labour market statistics and the possible state pension triple lock uplift, please see the following comment from Jon Greer, head of retirement policy at Quilter:
“This morning’s earnings figures from the Office for National Statistics look set to confirm a second bumper pay rise for circa 12 million pensioners as growth in average total pay came in at 8.5% during the May to July 2023 period. If confirmed, this will set the uplift for next year’s full State Pension payment (for those reaching state pension age from 6 April 2016), which will increase to £221.20 per week, or £11,502.40 per year. This level of uplift follows the inflation matching 10.1% boost that saw the 2023/24 state pension rise to £203.85 a week, or £10,600 annually.
“The triple lock ensures that the state pension is guaranteed to be uprated each year by wage growth, inflation or 2.5%; whichever is higher. Over the past few years, the triple lock has become a symbol of intergenerational tension. On the one hand, some say the triple lock should be scrapped because it provides a huge boost to pensioner income at significant cost to government at a time when funds are being increasingly stretched in other vital areas. On the other hand, there are arguments that the younger people should welcome the increased state pension as they will one day receive the benefit themselves.
“The truth is that both arguments are correct. Young people will benefit eventually, but that is a long time away. What matters in the here and now is that state pension uprating is done in a way that links pensioner income to experiences in the wider economy.
“Real wages aren’t really growing by 8.5% when you remove the huge toll inflation has had. In fact real wage growth is negligible. The government has previously said there must be fairness between taxpayers and pensioners in setting the state pension increase. That is true but often the level of increase given under the triple lock is 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. Just this week the Prime Minister refused to commit to including the triple lock in the Conservative party’s election manifesto, so we can expect the subject to be further pressed in the coming months as election campaigning kicks off.”
