What is the triple lock for pensions?
In 2010, the Conservative-Liberal Democrat coalition government introduced a triple lock guarantee on New State Pension payments. As a result, state pension payments are increased each year by whichever of the following rates is highest:
- September's Consumer Price Index (Inflation)
- Average earnings growth (as of July)
- Guaranteed minimum of 2.5%
However, things are slightly different for the 2022-23 tax year, where the government reduced the triple lock safeguard to a double lock. Due to an 'artificial' growth in wages, following the pandemic, qualified pensioners would have seen their state pension skyrocket by 8.3%. However, by changing the triple lock to a double lock, the state pension increased by 3.1%, in line with inflation instead.
Will the triple lock be enforced?
At the moment, we are not 100% certain whether the government will keep the triple lock protection for UK State Pensions. The State Pension triple lock has long proved a source of controversy for politicians, and with Prime Minister Rishi Sunak refusing to comment on honouring the pledge upon entering Number 10, it's caused significant worries for pensioners all over the country.
It is also understood that the Chancellor of the Exchequer, Jeremy Hunt, has been considering linking the state pension to average earnings (approximately 5.5%) instead. This would be almost half the rise in inflation and a huge blow for pensioners.
However, as of 8th November, the news is that the Prime Minister is expected to honour the state pension triple lock. The Times is reporting that there will be an increase in state pension and welfare payments in line with inflation announced in the autumn statement on 17th November.
When will the UK State Pension increase?
As it stands, pensioners will receive an increase in their state pension in April 2023. It usually occurs on the first Monday of the new tax year (2023-24), so you should expect your first payment increase on Monday, 10th April.
Retirement Planning with Samuels LLP
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