Re: State pension to rise at least 4% next year
Since the triple lock was introduced in 2011, state pensions have outstripped both prices and earnings.
Insurer Aegon has calculated that a single person receiving the old basic state pension – £97.65 back in April 2010 – is now receiving £129.20, an increase of 32%, while prices have increased by 24% and average earnings by only 20%.
However, the triple lock is an expensive arrangement for the government and there is no guarantee that it will continue beyond 2022.
Government figures indicate that if the triple lock continues indefinitely, pension spending is set to rise by £35 billion over 40 years from 2020-21. Without it, or under just earnings indexation, the increase will be only £21 billion.
Steven Cameron, pensions director at Aegon, comments: “Based on the latest earnings growth figures, it looks like state pensioners can look forward to an inflation-busting 4% increase in their state pension from next April.
“However, these inflation-busting increases do come at a significant cost. The state pension is not funded in advance so pensions are funded on a ‘pay as you go’ basis from today’s workers’ national insurance contributions.
"With the prospect of an early general election, it will be interesting to see where each party stands on commitments to retaining the triple lock for the next five years.”
A recent Parliamentary report proposed the state pension should instead rise in line with average earnings to ensure parity with working people.
In terms of what pensioners can expect if this change goes through, it’s possible that the state pension could rise at a slower rate, as there’ll be no guarantee of a minimum 2.5% increase.
But ..... the idea behind the triple lock was to protect pensioners from meaningless increases in the state pension, such as the 75p a week rise in 2000
, and to make sure their income was not eroded by the gradual increase in the cost of living.
And ..... there are over 13 million recipients of State Pension - which political party wants to incur their wrath over another 75p pension rise ..... ?
Baroness Castle, the veteran Labour pensions campaigner, accused the government of doing "just what the Tories did" in allowing the relative value of the contributory state pension to decline steadily.