• The House of Lords has voted 220 to 178 in favour of retaining the state pension triple-lock next year (Social Security (Up-rating of Benefits) Bill - Lords' votes in Parliament - UK Parliament)
• Amendment backs using an adjusted earnings measure “to take account of the exceptional impact of the COVID-19 pandemic on the level of earnings”
• Government expects to save £5.4 billion in 2022/23 following the decision to increase the state pension by 3.1% inflation figure rather than July’s 8.3% earnings growth figure
• Ministers likely to reject amendment and stick to plan to reinstate triple-lock in 2023
Tom Selby, head of retirement policy at AJ Bell, comments:
“Scrapping the state pension triple-lock – a Conservative manifesto commitment – for one year was always going to be controversial, with pensioners set to miss out on a post-lockdown 8.3% boost in their retirement incomes.
“While a 3.1% inflation increase is better than nothing, with prices expected to rise by 4% over the next 12 months this is likely to feel like a cut in real terms for millions of retirees.
“However, the Government has already banked over £5 billion a year in annual savings from the move and so is highly unlikely to budge from its position.
“If the triple-lock were to be retained, the revised earnings measure would likely need to save the Exchequer almost exactly the same amount of money as scrapping the triple-lock – meaning the net impact on those in receipt of the state pension would in any event be relatively small.”
How axing the triple-lock will affect retirees
If the state pension rises in line with September’s 3.1% inflation figure in 2022:
• The basic state pension will rise by £4.25, from £137.60 per week to £141.85 per week
• The flat-rate state pension will rise by £5.55, from £179.60 per week to £185.15 per week
• If the earnings element of the triple-lock had been retained, the state pension could have increased by 8.3% next year
o This would have increased the basic state pension to £149 per week and the flat-rate state pension to £194.50 per week*
o Decision to suspend the earnings element of the triple-lock for 2022/23 will therefore ‘cost’ retirees in receipt of the full flat-rate state pension £9.35 per week
