Pensioners Brace for Disappointment as Officials Consider Adjusting Triple Lock Calculations
In a potential blow to pensioners, the expected £902 annual increase they were anticipating from April next year may not materialize. Whitehall officials are contemplating tweaking the figures used to calculate the state pension boost. The “triple lock” pledge currently guarantees a rise in line with the highest of inflation, wage growth, or 2.5 percent, which would result in an 8.5 percent increase next year.
However, officials argue that these numbers are artificially inflated due to one-off public sector bonuses and wage settlements. They estimate that these distortions have caused wage growth to increase by 0.5 to 1 percentage points. To mitigate this, the government may exclude bonuses paid to NHS staff and civil servants, potentially saving the Treasury hundreds of millions of pounds.
The Office for National Statistics acknowledged that earnings growth had been influenced by one-off payments between June and August. Consequently, if the state pension rises by 7.5 percent instead of the anticipated 8.5 percent, retirees could receive up to £105 less than expected. While the move would not technically violate the triple lock, former pensions minister Sir Steve Webb described it as an “obvious fiddle.”
On a positive note, it was reported that wages are outstripping inflation for the first time since October 2021. According to the Office for National Statistics, regular pay grew by 0.7 percent in real terms in the three months leading up to August. Actual wage rises reached record levels, with a 7.9 percent increase in the three months to July and a 7.8 percent increase in the three months to August. In August, inflation stood at 6.7 percent, with expectations that it will decrease further to 6.6 percent in September.
Critics believe that any attempt to manipulate the figures before a general election would be ill-advised. Last year, when inflation skyrocketed to a 40-year high, the government suspended the triple lock, denying pensioners an expected record rise. The decision on next year’s increase, which would cost the Treasury £8 billion and raise the state pension by £17.35 per week to £221.20, is expected to be announced by the Chancellor in his Autumn Statement next month.
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