Local independent financial adviser, Becky Hammonds of Willow Financial Solutions, looks at the possible impact of the pledge to reinstate the triple lock pension and whether the new Prime Minister will honour the Conservative government’s commitment.
Earlier this year the then Chancellor, Rishi Sunak confirmed that he will apply the triple lock to the 2023/24 State Pension increase. This will lift the new State Pension above £10,000 for the first time.
The triple lock increases the State Pension each year either by inflation, earnings or 2.5 per cent, whichever is higher.
It was introduced in 2010, to reduce pensioner poverty and help retired people close the gap with those in work.
However, the Chancellor suspended the earnings element of the triple lock last year because it would otherwise give pensioners an increase of more than eight percent from April, as wages bounced back after the pandemic. This meant that average earnings were not included in the calculation for pensions this financial year, with the inflation rate picked instead.
But the Government has confirmed that it will reintroduce the triple lock in April 2023 until at least 2024.
Inflation is soaring and if predictions are correct, it would result in the Consumer Prices Index measure hitting 13 per cent this winter.
So, will the Government keep its state pension triple lock promise this time in the wake of rising inflation? It is widely believed that Liz Truss will honour the government’s commitment, but we will need to see what emerges in the next Budget.
The reintroduction of the triple lock could result in a state pension rise of around £1,000 a year to £10,900 while even at the current level of 10.1 per cent it would be upped to £10,600.
It is estimated that more than 12 million people who claim state pension are affected.
For pensions and investment advice contact Becky Hammonds on 07969 269677 or email becky@willowfs.co.uk
