Pension triple lock: Liz Truss no longer standing by commitment - what is government pension guarantee?

Liz Truss is no longer standing by her commitment to increase state pensions in line with soaring inflation as her imperilled leadership is overhauled by Chancellor Jeremy Hunt.

Downing Street indicated the Prime Minister could ditch her commitment to the pension triple lock as the new Chancellor looks to plug a multi-billion pound black hole. The triple lock on pensions is a guarantee from the UK government to increase the state pension by whichever is highest out of inflation, earnings or 2.5 per cent.

The triple lock was paused last year and a “double lock” removed wages when working out the increase, meaning the state pension went up in April by 3.1% - the rate of inflation at the time. Around 12.5million people who receive the state pension could be dealt a real-terms cut in earnings if their payments do not rise in line with inflation, standing at around 10%.

The pension triple lock was a Conservative manifesto pledge in 2019, and one Truss reiterated in her Tory leadership campaign. As recently as October 2 Ms Truss was clear state pensions would increase in April by whichever is highest – 2.5%, wages or inflation. “I’ve committed to the triple lock. Yes,” she said in a BBC interview.

But, after replacing Kwasi Kwarteng in the Treasury after their disastrous mini-budget, Downing Street backed down on this pledge.

The Prime Minister’s official spokesman said: “We are very aware of how many vulnerable pensioners there are and indeed our priority ahead of this fiscal plan is we continue to protect the most vulnerable in society. The Prime Minister and the Chancellor are not making any commitments on individual policy areas at this point, but as I say the decisions will be made through the prism of what matters most to the most vulnerable.”

Moving to review the pledge was a “mutual decision” by Ms Truss and Mr Hunt, according to the official, who denied that the Prime Minister had been pressured into it by her new Chancellor.

What is the pension triple lock?

The triple lock on pensions is a guarantee from the UK government to increase the state pension by whichever is highest out of inflation, earnings or 2.5 per cent. It is a safeguard to ensure that the state pension doesn’t lose value over the years because of rising inflation, meaning an increase in the cost of living and goods.

The three factors involved in measuring state pension increases are:

• average earnings
• inflation based on the Consumer Price Index (CPI)
• 2.5 per cent

It was introduced in 2010 so that the state pension would maintain its real terms value but has been much talked about in recent times due to slow growth in earnings and inflation.

It means that pensioners will get a minimum 2.5 per cent increase year on year, strengthening the spending power of people in receipt of the state pension.

What have opposition parties said?

Labour’s shadow work and pensions secretary Jonathan Ashworth said: “Tory MPs have already imposed this year the biggest real-terms pension cut ever for Britain’s retirees and their disastrous budget has them considering further cuts to pensioners’ incomes. Pensioners deserve so much better than Liz Truss and her disastrous mistakes that are leaving older people paying the price.”

The Liberal Democrats’ pensions spokeswoman Wendy Chamberlain added: “It would be a kick in the teeth for millions of people if Truss now backtracks on her triple lock promise. The British public will never forgive the Conservative Party if they break this promise.”

On Wednesday, the Office for National Statistics will publish the Consumer Price Index measure of inflation, on which changes to benefits and pension payments are calculated.