State pension will still be subject to ‘triple lock’ increase for 2021-22
23 September 2020
The government has introduced a Bill into Parliament which ensures that the state pension will increase in tax year 2020-21, and that the ‘triple lock’ will be maintained.
The ‘triple lock’ means that, where earnings increase, the state pension will increase by whichever is highest of the following:
- Price inflation
- Earnings growth
- 2.5%
A technical detail within current rules means that if earnings growth is negative, then the state pension will not increase, regardless of price inflation, which would also mean that the 2.5% increase would not be applied. The new Bill has been drawn up to ensure that this detail does not lead to a freeze on the amount of state pension that is made available next tax year, as it is predicted that earnings growth will be negative, as a result of the coronavirus crisis and employees being placed on furlough only receiving 80% of their standard pay.
The fact that the ‘triple lock’ has not been scrapped is in line with one of the key manifesto pledges of the Conservative party’s 2019 manifesto, which stated:
“On entering Government in 2010, the Conservatives acted decisively to protect the UK’s pensioners. The ‘triple lock’ we introduced has meant that those who have worked hard and put in for decades can be confident that the state will be there to support them when they need it. We will keep the triple lock…….. ensuring that older people have the security and dignity they deserve.”
Recently, speculation has been rife that Chancellor, Rishi Sunak, was intending to get rid of the ‘triple lock’ due to worries that it would soon become unaffordable, and unrealistic to offer. The introduction of the Bill today confirms that there are no such plans at this moment in time.
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