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Pension triple lock pledge from both Labour and Conservatives

Paloma Kubiak
Written By:
Paloma Kubiak

As part of the battle to win the next General Election, both the Conservatives and Labour have pledged to keep the pensions triple lock if they triumph.

Speaking on LBC radio, work and pensions secretary Mel Stride said he’s “confident” the pensions triple lock will remain beyond the next year.

He said: “It’s not for me to write the manifesto on air, but I think it almost certainly will be”.

Meanwhile a spokesperson for Labour leader, Keir Starmer, said the party was committed to the pensions triple lock and it would feature in their manifesto.

The pensions triple lock is a mechanism which guarantees that the state pension will rise by the higher of average earnings, inflation or 2.5%.

This April, retirees received a bumper 10.1% increase – the biggest rise ever – as the figure was based on September’s inflation reading, taking the new/flat rate state pension to £10,600 while the basic state pension for pre-April 2016 retirees increased to £8,122.

Calculations by Interactive Investors based on the Bank of England’s latest inflation projections suggest retirees could see a 7% state pension increase in April 2024.

This would mean an annual state pension for post-2016 retirees of £11,342, while those who retired earlier could see an annual £8,691 reach their bank accounts.

Conservative party manifesto on pension triple lock broken before

However, the pensions triple lock hasn’t been without controversy, with younger generations of workers suffering amid the cost-of-living crisis failing to secure wage increases of the same level.

And it has also been cast into doubt in recent times, with former Prime Minister Lizz Truss promising to protect it as part of a last announcement before her departure. However, many suggested Rishi Sunak could scrap it as the Government prioritised cutting costs and plugging the funding black hole.

After all, it was Sunak in his previous position of chancellor who broke the 2019 Conservative manifesto by scrapping it for April 2022 due to distortions created by the pandemic which would have seen retirees receive big increases in their retirement income.

But for now, it seems the pensions triple lock could continue. And a Liberal Democrat spokesperson, said: “The Liberal Democrats introduced the pension triple lock in 2010 and we committed to keeping it in every manifesto since then. We opposed the Conservative Government’s appalling decision to break it, costing pensioners hundreds of pounds a year, and we remain totally committed to the triple lock now.”

Steven Cameron, pensions director at Aegon, said: “We welcome the early pledges from the Conservative and Labour parties that they will keep the pensions triple lock if in power after the next general election.

“It’s really important that both retirees and those of working age have this information before voting.”

Cameron added that this “valuable guarantee” for pensions comes with a “high price”, particularly at times of high and volatile price and earnings inflation.

“One way to control increasing costs is to increase the state pension age, faster than currently planned. There will be some people who are happy to see the triple lock continuing, even if it means state pension age has to go up to balance the books.

“Others might have preferred to keep their entitlement to claim state pension at the current state pension age, even if that meant the triple lock’s generous increases had to be constrained.

“So, if the likely outcome is the triple lock stays and state pension age increases, it’s even more important to give individuals the new option to take their state pension slightly earlier at a reduced level. Baroness Neville-Rolfe in her recent report on state pension age recommended the Government consider this and we’d strongly support early analysis of how this might be delivered,” he said.