Millions on state pension set for huge triple lock rise as exact amount emerges
Rishi Sunak is considering the possibility of eliminating the triple lock in the future, which could result in a significant financial gain of hundreds of pounds for millions of retirees next year.
Figures released this morning show average pay – including bonuses – went up by 8.5% between May and June. This means the state pension will go up by at least the same amount because of the so-called triple lock system.
This would see the state pension for men born after April 1951 and women born after April 1953 shoot up £901 from £10,600 to £11,501. For those born before this, the full basic state pension will go up £690 from £8,122 to £8,812. The rises will take effect in April next year.
It is the second bumper rise in a row, with pensions going up by 10.1% in April, due to high inflation the previous September. The triple lock protection means the state pension rises each year in line with the highest out of 2.5%, wage rises or inflation.
Wage rises are expected to outstrip inflation, meaning the Treasury will need to find billions of pounds to fund pension rises. Cabinet members are said to be split over whether the triple lock – a Tory manifesto pledge in 2019 – should be scrapped after the next election.
The rise in average earnings was partly affected by one-off payments made to civil servants and NHS staff, researchers said. Regular pay went up by 7.8% over the same period, ONS figures show.
What is the state pension triple lock? Read more
The latest figures come days after the PM declined to say whether the key policy would be included in the Conservative Party ’s manifesto at the next election. He told reporters: “We’re not going to speculate on the election manifesto now. I’ve got plenty to get on with between now and then.
“But the triple lock is the government’s policy and has been for a long time. I’m not going to get into our manifesto now but the triple lock has been a long-standing policy for us.”
Former Tory leader Lord Hague has said that in the long term the triple lock is “unsustainable”. He told The Times that the rising number of pensioners “is an issue we’ll have to confront”.
He said: “I would not expect at the coming election the political parties to say they’re going to do away with the triple lock but it is unsustainable over time. One of the reasons why you would change that is to say, ‘We need to take some of that money over time for the healthcare of those people who would otherwise be receiving that pension’.”
What is the pension triple lock?
The triple lock system is a protection which means pensions go up each April by whichever of these three things is highest:
- inflation according to the Consumer Prices Index the previous September
- average increase in wages across the UK
- or 2.5%
It was introduced by the coalition government in 2010. It was introduced to make sure pensions weren’t dwarfed by a rise in the cost of living or an increase in wages.
It was suspended following the Covid pandemic but restored in 2022.
A Labour Party spokesperson said: “The Conservative Party promised to maintain the triple lock at the last election and we have urged the Government to stick to that commitment. As Angela Rayner said, all future spending commitments for after the election will be laid out in our manifesto when we know the state of the public finances, as is usual practice.”
Today’s figures also showed that the rate of unemployment lifted to its highest level for nearly two years, at 4.3% in the three months to July, up from 4.2% in the previous three months.
Darren Morgan, ONS director of economic statistics, said: “Earnings in cash terms continue to increase, at a record rate outside the pandemic-affected period. Coupled with lower inflation, this means people’s real pay is no longer falling.
“Unemployment continues to increase in the latest three months. Correspondingly, employment is down, driven by falls among men and the self-employed.
“The proportion of people neither working or looking for a job is slightly up, with more students, as well as the long-term sick reaching yet another record.”
Tom Selby, head of retirement policy at finance firm AJ Bell, said: “Retirees are set to receive their second blockbuster state pension increase in a row as a result of the government’s ‘triple-lock’ policy.”
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