Chancellor Rishi Sunak has said the pensions triple lock will remain in place for now, despite the UK facing the worst recession on record.
Speaking on LBC radio on Tuesday morning (6 October) Sunak confirmed the triple lock, the safeguarding mechanism which ensures the state pension does not lose value because of inflation, would not be removed in the near future.
Responding to a question from LBC on maintaining the triple lock, he said: “Yes, our manifesto commitments are there and that is very much the legislative position. We care very much about pensioners and making sure they have security and that’s indeed our policy.”
The triple lock guarantees the basic state pension will rise in line with the lowest of earnings, inflation or 2.5%.
The 2019 Conservative manifesto pledged the government would retain the triple lock, which has been in force since 2010.
The UK has entered its biggest recession on record as a result of the coronavirus pandemic.
Overall GDP is now 21.8% smaller than at the end of 2019, highlighting the impact of coronavirus lockdown measures on economic activity.
Aegon pensions expert Steven Camerona said: “The Chancellor appears to have confirmed the triple lock will stay in place, although not for how long. There have been concerns that the furlough scheme could lead to a sharp fall in earnings this year followed by an equally sharp rise next.
“This could have seen pensioners still receive the 2.5% minimum increase next April followed by a much higher earnings related increase in April 2022, with some speculating this could hit double figures at a time when workers might just have been returning to pre-Covid earnings levels.
“However, the latest earnings growth figures showed a less marked fall of around 1%, which makes a double digit bounce back in the coming 12 months far less likely. This may have given Rishi confidence to retain the triple lock for now if he doesn’t expect to face a massive increase in the state pension costs from 2022 onwards.”
A report released in April from think tank The Social Market Foundation (SMF) proposed the triple lock be scraped so the economic burden of the pandemic could be shared fairly between the old and the young.
The SMF estimated replacing the triple lock with a ‘double lock’ by removing the 2.5% promise would save £20bn over five years, which could be used to help meet the costs arising from lockdown.