The Triple Lock

Many people, especially pensioners, will have heard about 'The Triple Lock' particularly in recent times.  Some of you though, may not know exactly what it is.  I have been told that it would be quite possible to write a Thesis on the Triple Lock but here we provide a short summary. 

If anyone is interested in more detail I would suggest a visit to the National Pensioners Convention (NPC) web-site.

The Triple Lock is a device used by government to set the increase in the State Pension in April of each year. It was introduced by the Coalition Government in 2010 in recognition that the real value of the basic State Pension had fallen over many years. It was decided that the State Pension would be increased by 2.5%, or the value of the Consumer Price Index, or the Average Earnings Index the previous September, whichever is the highest. Thus we have the Triple Lock. However the Triple Lock only applies to the basic pension and not to any enhancements such as SERPS or the Graduated Pension.  

  From 2001 to 2010 the State Pension was increased either by the Retail Price Index (Inflation) or the Index of average earnings. Prior to that the value of the State Pension suffered a very real reduction in value when the link with earnings was broken by the then Conservative government in 1980. Earnings surged ahead at that time and by the time the earnings link was restored in 2010 the basic State Pension stood at £97.65 per week compared with £161.30 per week had the earnings link still been in place. The guaranteed increase of 2.5% introduced in 2010 was a modest attempt to improve the value of the pension.

In addition, the pensions minister at the time made it clear that the triple lock was part of a package of reforms including the rise in State Pension age – so while people would have to wait longer for their pension in the future, once in payment it would be increased.

 Even so, this doesn’t mean that over the course of retirement pensioners become better off – often other sources of income diminish - private pensions can lose value over time, savings may get used up, and many face bereavement and a big drop in income.

  In April 2016 a New State Pension was introduced at a much higher rate (then £155 pw) and it is linked to the Triple Lock. But it is only payable to folk who retired in 2016 which left the vast majority of pensioners on a basic pension of £119pw. 

  The Triple Lock is now under attack both by members of the Conservative Party and certain media publications on the grounds that it is too generous and the country cannot afford it. This despite the fact that the State Pension remains one of the least adequate in the developed world, ranked 32nd out of 34 OECD countries.

  While the triple lock is really important to help maintain incomes in retirement, especially for those on low incomes, we must not fall into the trap of seeing it as something that only affects current pensioners and therefore unfair to younger generations. In some respects, any changes will hit the future retirement income of younger people the hardest. Research by the independent Pensions Policy Institute has shown that without the triple lock it will be harder for younger workers on low incomes to achieve an adequate income in retirement. Given the adverse impact the pandemic has had on jobs, earnings, and prospects for saving into a private pension, the State Pension could well become even more important for todays’ workers when they reach retirement. 



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