Pensions - Articles - Potential Government saving from suspending triple lock

Growth in average total pay (including bonuses) for three months to July was 8.3%, highlighting labour market distortions during pandemic. Decision to move from triple to double lock for one year potentially saves government around 5bn compared to sticking to the triple lock unadjusted

 Steven Cameron, Pensions Director at Aegon comments: “Today’s earnings figure* gives an indication of how much the government has saved by removing the earnings element of the state pension triple lock for next year. The pandemic has created huge distortions to the average earnings figures with a fall in earnings at the start of the pandemic followed by a very sharp increase as furlough ended.

 “Had the triple lock remained untouched, state pensioners would have been granted an unrealistic increase of 8.3% next April**, costing the government around £7.5bn next year and every future year***. But Thérèse Coffey’s announcement last week to suspend the triple lock for a year, will now mean the state pension increases by price inflation or 2.5%, whichever is higher. It is expected inflation will trigger the increase, and if this figure is around 3%, the government will save the around £5bn moving to the ‘double lock’.

 “Today’s state pensions are paid for by today’s workers through National Insurance contributions. Maintaining the triple lock unadjusted would have led to serious questions over intergenerational fairness, particularly in light of last week’s decision to increase NI by 1.25% to fund health and social care.”

 *ONS, average earnings:
 ** Under the triple lock, the state pension rises annually at the highest of earnings inflation (total pay for three months to July), price inflation (September CPI figure published in October) or 2.5% a year.
 ***The OBR suggest the triple lock costs the government around £0.9 billion for every 1 percent rise. OBR, Fiscal Risks Report:, 5.6, page 209.


Back to Index

Similar News to this Story

Uber urges rivals to join cross industry pension
Kate Smith, Head of Pensions at Aegon, as Uber rolls out its pension plan for drivers for the first time and urges other companies to create a cross-i
Almost half of furloughed workers change retirement plans
As the government’s furlough scheme comes to an end this month, new research from Canada Life reveals that nearly half (46%) of currently furloughed w
New climate risk reporting rules for pension funds
James Wintle, Managing Director, Retirement at Willis Towers Watson on the main points of how the U.K.’s largest pension schemes must take steps now t

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS


Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.