Work and Pensions Secretary Therese Coffey has re-confirmed that the Government remains committed to the state pension triple lock for the rest of this Parliament, despite a temporary move to a ‘double lock’ this year.
Her comments, made in the House of Commons, means pensioners could be in line for a significant rise next year with inflation continuing to soar. Pension experts suggest that on current forecasts the state pension could rise by 8 per cent next year.
However this comes after a below-inflation increase this April of just 3.1 per cent, after the earnings link was removed. This rise is related to inflation figures last September, before the recent spiralling cost of fuel and food.
WIth the Spring Statement due this week, there are calls for the chancellor to increase the state pension, and potentially pay for this by scaling back what could be a record increase the following year.
Aegon pensions director Steven Cameron says: “Renewed commitment from the Government to the state pension triple lock will offer some reassurance to state pensioners.
“Many were left severely disappointed when the government broke their manifesto commitment and temporarily replaced the state pension triple lock with a less generous ‘double lock’.”
He points out that the 3.1 per cent rise in April is far below the current inflation rate which was sitting at 5.5 per cent last month, and is forecast to rise further again in the coming months.
He adds: “The latest commitment is to be welcomed, but it still means many pensioners face a difficult squeeze on their cost of living for the next 12 months.
“Looking ahead, there’s a good chance that state pensioners will be in for a bumper increase in April 2023. The Bank of England’s latest prediction is that inflation might reach 8 per cent in the Spring and could be even higher later in the year.
“However, a year’s a long time to wait to ‘catch up’ and unfortunately, some of our elderly might not live to see the increase. Tomorrow’s mini Budget presents one last chance for the chancellor to offer further temporarily support for state pensioners.
“One approach would be to offer a higher state pension increase this April in return for a lower rise next April. For example, he could raise this year’s increase by 2.5 per cent to 5.6 per cent, but then pay 2.5 per cent less than whatever the triple lock rise would have been next April.”
He adds that while this would come at a cost to the chancellor for the coming tax year, it would be financially neutral in later years as the state pension from April 2023 would be the same as it would have been. “But in the meantime, state pensioners would have benefitted from an extra 2.5 per cent , equivalent to around £4.50 a week for someone on the full state pension,” he says.
