Pension Triple Lock To Be Scrapped For One Year After Being “Skewed And Distorted" By Pandemic
The state pension will rise by inflation or 2.5% — whichever is higher (Alamy)
The government has temporarily scrapped the average earnings element of its manifesto ‘triple lock’ pension pledge, claiming the figure had been “skewed and distorted” by the pandemic.
Under the ‘triple lock’ system, pension payments rise each financial year in line with average earnings, inflation or 2.5% — whichever is highest.
The move was announced shortly after the Prime Minister confirmed his government would be breaking its manifesto commitment not to raise tax by introducing hike to National Insurance contributions.
In a statement to the Commons, work and pensions Thérèse Coffey confirmed that the triple lock would be suspended for the 2022-2023 financial year, and would resume the year after for “the remainder of this Parliament”.
“This will ensure pensioners’ spending power is preserved and protected from higher costs of living, but will also ensure that as we are having to make difficult decisions elsewhere across public spending, including freezing public sector pay, pensioners are not unfairly benefiting from a statistical anomaly,” she said on Tuesday.
Distortions to wages during the coronavirus crisis mean pensioners would have received a rise of as much as 8% — equating to an extra £4 a week for pensions — costing the government an extra £3 billion a year.
“At a time where we have made tough decisions to restore the public finances which have impacted working people, such as freezing income tax personal thresholds at current levels, this would not be fair,” Coffey continued.
“Setting aside the earnings element is temporary and only for one year. This means we can and will apply the triple lock as usual from next year for the remainder of this Parliament in line with our manifesto commitment.”
“Given the unique and exceptional, this year’s measure is being skewed and distorted, reflecting a technical and temporary period of rebounding earnings.”
Shadow pensions secretary Jonathan Reynolds criticised the move, saying he believes “governments should keep their manifesto promises”.
He said the ministers had produced “more of a triple let down than a triple lock” by reneging on commitments on international aid, National Insurance, and now pension increases in recent months.
“This decision isn’t a one off but a significant repudiation of the basis on which the government was elected, and it would be naive to say otherwise.”
Reynolds said that Labour “cannot take the government on word alone”, and questioned why average earnings could not be calculated whilst taking the impact of the furlough scheme into account.
He also asked the minister to produce the analysis which led to the decision, adding that “only then could any opposition, or any MP, make a decision on what is being proposed.”
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