Government unpicks the pension triple lock
Pensioners had been in line for a bumper increase in the state pension from April 2022 under the triple lock rules. However, the government has now confirmed this will not go ahead. What’s going on?
The pensions triple lock refers to the set of rules by which the state pension rises each year. Under the lock, the state pension rises by the greater of:
- inflation, as measured by consumer prices index (CPI)
- the average wage increase; or
- 2.5%
This has been the case since 2010, and guarantees that the state pension does not fall in real terms. However, the government has suspended the triple lock mechanism for 2022/23. As employees returned from furlough between May and July this year, they also returned to full pay. This produced an artificial rise in average earnings of approximately 8%. The government feels that this justifies reducing the lock to a double lock, i.e. the state pension will increase by the greater of the CPI inflation percentage, or 2.5% from April 2022. It has pledged that the triple lock mechanism will return for 2023/24. Whilst the move is perhaps understandable in the unique circumstances, some critics say that it is a precursor to abolishing the triple lock altogether.
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