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State pension triple lock to be scrapped for one year

Joanna Faith
Written By:
Joanna Faith

The earnings element of the state pension ‘triple lock’ will be abandoned for one year, the government has announced.

The temporary move follows unprecedented fluctuations to earnings caused by the Covid 19 pandemic.

The triple lock is the mechanism used to calculate increases to the state pension each year.

It guarantees the basic state pension rises by whichever is highest out of average earnings, inflation or 2.5 per cent.

Sticking to the triple lock formula would have granted state pensioners an increase of around 8.8 per cent after the pandemic created huge earnings distortions.

The Department for Work and Pensions (DWP) said: “Younger people have been hit hardest by the financial impacts of the pandemic, and the artificial inflation of pensioner incomes at this time would be out of kilter with the pressures being experienced by the rest of the population.”

Sarah Pennells, consumer finance specialist at Royal London, said:  “Many pensioners will be deeply disappointed that the triple lock has been scrapped for next year, as the state pension is still the bedrock of many pensioners’ retirement income.

“Women and those who are self-employed are among those who will be particularly affected by the temporary scrapping of the triple lock, as they are more likely to rely on the state pension in retirement.

“However, it is encouraging that the Government hasn’t abandoned its longer- term commitment.”

Steven Cameron, pensions director at Aegon, said:All eyes will now be on September’s all-important CPI [consumer price index] figure, announced in October, to see what the increase in the state pension will be next April.”