Prime Minister Liz Truss has spoken about the triple lock during Prime Minister’s Questions today. (Picture: House of Commons/PA Wire)
While ex-Chancellor Rishi Sunak’s budget contained a whole load of changes that affected everybody’s wallet in one way or another, the UK has seen even more turbulent economic times of late.
The Bank of England has revealed the UK is almost certainly already in a recession with GDP falling and interest rates at the highest in over a decade.
Interest rates have been raised to 2.25% from 1.75% – the highest level since November 2008.
Upon being appointed Chancellor of the Exchequer, Kwasi Kwarteng brought in a mini-budget in order to bring government policy more in line with new PM Liz Truss’s administration’s priorities.
While it included massive changes to parts of the UK economy, including an energy price guarantee that will limit bills for the average household to £2,500, the disastrous market reactions and a huge drop in confidence in the pound saw him ushered out of the door, with Jeremy Hunt becoming our third Chancellor in a very short space of time.
One thing that has been discussed recently is the potential suspension of the ‘triple lock’ format on state pensions.
But just what is the triple lock pension and what could happen to it?
What is the triple lock pension?
The triple lock is a commitment that state pensions would rise by whichever was the largest of three figures – annual inflation, average earnings rises, or by 2.5%.
With this in mind, pension recipients could have expected a rise of more than 10% in their weekly payments next year as inflation reaches new highs – especially useful in times of post-pandemic uncertainty.
The triple lock pension returned this year. (Picture: Getty Images)
What has previously happened to it?
In September 2021, the former Department of Work and Pensions minister, Therese Coffey, announced a temporary suspension of the triple lock, and that the government would decide on pensions based on annual inflation or by 2.5%.
Although the concept of a triple lock pension was a part of the Conservatives’ manifesto, the choice not to consider annual earnings was made to prevent those who were expecting to receive a pension ‘unfairly benefitting from a statistical anomaly’.
However, the triple lock returned earlier in the year.
What could happen to it?
Amongst the economic chaos that followed the mini-budget, there has been much speculation on the pension triple lock recently, with much of the Prime Minister and former Chancellor’s economic plans ripped up by new Chancellor Jeremy Hunt.
Foreign Secretary James Cleverly was unable to give a firm commitment to keeping the triple lock as late as this morning (October 19).
However, it was confirmed by the Prime Minister, during what was a difficult Prime Minister’s Questions for her today, that the triple lock would remain in place – at least for now.
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What is the current state pension worth?
The full, ‘new’ current flat-rate state pension (for those who reached state pension age after April 2016) is £185.15 a week.
The full, ‘old’ basic state pension (for those who reached state pension age before April 2016) is £141.85 per week.
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All you need to know on the current state of the pension triple lock.