Steven Cameron, Pensions Director at Aegon said: “Chancellor Rishi Sunak appears to have confirmed today that the state pension triple lock will stay in place for now. If his comments are being interpreted correctly, it will be welcome news for state pensioners, although those of working age may have concerns over the cost of this, as today’s state pensions are paid for out of today’s workers’ National Insurance contributions.
“There have been concerns that the furlough scheme could lead to a sharp fall in earnings this year followed by an equally sharp rise next. This could under the triple lock formula have seen state pensioners still receive the 2.5% minimum increase next April followed by a much higher earnings related increase in April 2022, with some speculating this could hit double figures at a time when workers might just have been returning to pre-COVID earnings levels. However, the latest earnings growth figures showed a less marked fall of around 1% which makes a double digit bounce back in the coming 12 months far less likely. This may have given Rishi confidence to retain the triple lock for now if he doesn’t expect to face a massive increase in the state pension costs from 2022 onwards.
“Ahead of their election win, the Conservatives made a Manifesto Commitment to retain the triple lock. However, in these unprecedented times, and with difficult choices ahead to get the nation’s finances back on a sounder footing, it’s likely that questions will remain over whether maintaining the triple lock indefinitely is either affordable or fair across generations.”
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