What’s the state pension triple lock? Inflation and UK wage growth impact - Rishi Sunak comments explained

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The latest Office for National Statistics UK wage growth data suggests pensioners could be in line for another big state pension increase in 2024

UK pensioners could be in line for another major state pension boost in 2024, after the latest Office for National Statistics (ONS) labour market data showed UK wages increased at a record pace between April and June.

Thanks to the pensions triple lock, higher-than-expected growth in salaries could translate into a large uplift for over-65s. It comes after the state pension went up 10.1% in April 2023 as a result of the UK’s inflation crisis - a rise equivalent to almost £1,000 for someone who receives the full amount.

While the triple lock was a headline manifesto commitment for the Conservative Party throughout the 2010s, it has not been a cast-iron guarantee since the Covid-19 pandemic. The policy was suspended for the 2022/23 financial year by Boris Johnson’s government, while Liz Truss also threw it into doubt during her short tenure as Prime Minister last autumn.

Chancellor of the Exchequer Jeremy Hunt eventually pushed the policy through after Truss was ousted. Both Rishi Sunak’s government and the Labour Party have committed to implementing the pledge next spring.

But how does the triple lock work - and how much more money could pensioners get next spring?

What is the pensions triple lock?

The pensions triple lock was a policy brought in by David Cameron’s Conservative/Liberal Democrat coalition government in 2010 and has been a key policy for Tory administrations ever since. It governs how much state pensions rise by and essentially guarantees that pensioners will never see their income fall.

As its name suggests, the triple lock has three things against which pension rises are guaranteed:

  • Inflation (as measured by the Consumer Price Index (CPI) each September)
  • The average wage increase (between May and July each year)
  • 2.5%

State pensions will go up by whichever of these three things is highest, with all three mechanisms having been used since the policy’s introduction.

Jeremy Hunt resurrected the pensions triple lock on 17 November (image: AFP/Getty Images) Jeremy Hunt resurrected the pensions triple lock on 17 November (image: AFP/Getty Images)
Jeremy Hunt resurrected the pensions triple lock on 17 November (image: AFP/Getty Images) | AFP via Getty Images

The triple lock was suspended for a year in September 2021 as the government feared Covid-19 furlough would lead to wage increases of 8.8% (incidentally, this turned out to be a much lower percentage than the record CPI inflation figure in October 2022). With people returning to full-time work when the policy began to be withdrawn, it was felt wages could spike.

It meant the triple lock became a double lock for the 2022/23 financial year - guaranteeing pensions against inflation or the 2.5% figure. This broke a 2019 Conservative manifesto promise to keep the triple lock in place for the duration of the Boris Johnson government’s term in office. In March 2022, then-Department for Work and Pensions Secretary Therese Coffey confirmed the return of the triple lock for 2023/24.

Despite Liz Truss putting this commitment into doubt last autumn, the triple lock was reinstated by Rishi Sunak’s administration and returned in April 2023. It is now expected to return in April 2024 as both the Conservatives and Labour have said they will keep the policy in place.

How much more money could pensioners get?

Pensioners received a 10.1% uplift in April 2023 thanks to the record levels of inflation seen last September.

It meant the full amount of the state pension rose £18.70 a week (£972.40 a year) to £203.85. While this increase was welcomed at the time, it came after a year in which pensioners had seen just a 3.1% uplift in a year during which inflation rapidly climbed into double-digits.

Based on the latest inflation forecasts and wage growth data, it would seem pensioners can expect a similarly sized increase in April 2024. Inflation is expected to continue to tumble over the second half of 2023 (the rate hit 6.8% in July), meaning September’s CPI figure is likely to be lower than that for wage growth. Analysis of the latest ONS wage growth data by investment platform Interactive Investor suggests pensioners could be in line for an 8.2% uplift assuming the high rate of growth continues into July (the May to July ONS figures are used by the government to determine the wage rate considered in triple lock calculations).

Pensioners could be set for a £770 rise in their state pension in the 2023/2024 financial year (image: Adobe)Pensioners could be set for a £770 rise in their state pension in the 2023/2024 financial year (image: Adobe)
Pensioners could be set for a £770 rise in their state pension in the 2023/2024 financial year (image: Adobe) | Adobe

Assuming its estimates are correct, it would mean the state pension could rise to £220.56 a week - a £16.71 increase on current rates. Overall, pensioners would be in line to get £11,469 per year (an £869 uplift).

But this hike would still mean some pensioners continue to struggle with their living standards, Interactive Investor’s head of pensions and savings, Alice Guy, said: “The rising state pension is great news for pensioners, especially the millions that have no other income apart from the state pension.

“Despite recent increases, the UK state pension really only provides a basic income in retirement and those who want to have more than a basic standard of living will need to save separately in a workplace or private pension.”

What did Rishi Sunak say?

On Wednesday (16 August), the Prime Minister committed his government to the triple lock for a second time, and suggested it could see pensions rise by around 8% next April.

Speaking to ITV News on a visit to Leicester, Sunak was asked whether he was uncomfortable with a rise of 8%. He responded: “No, I think the most important thing is that we continue to bring inflation down more generally. But while inflation is higher than we would like, I also believe it is right to step in and help people with the pressures that it brings.”

It means pensioners look set to get a rise in their income next year - even if it proves to be expensive to the public purse.

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