State pension triple lock retained again

The government has confirmed it will maintain the triple lock, meaning the state pension will continue to increase by the highest of average earnings growth, inflation or 2.5% each year.

However, commentators remain sceptical about the ability of the mechanism to survive for much longer.

Chancellor Jeremy Hunt neglected to mention the triple lock in his Spring Budget speech today (6 March).

However, the Spring Budget document, published by the Treasury following the announcement, confirmed that the mechanism would remain in place.

It said that, in 2024-25, the full yearly amount of the basic state pension will be £3,700 higher, in cash terms, than in 2010.

That is £990 more than if it had been uprated by prices and £1,000 more than if it had been uprated by earnings (since 2010).

Cover story: Hold or fold? Future of triple lock remains uncertain

Last Month, Labour committed to retaining the triple lock if it wins the general election, which is due to be called no later than January 2025.

With both parties seemingly unwilling to replace or overhaul the triple lock, BNY Mellon Investment Management head of retirement Richard Parkin questioned what the “end game” on state pension is.

“It seems this has become a game of ‘who blinks first’ and any suggestion of reviewing the triple lock simply provides political ammunition to the opposing party,” he said.

“What we need is a clearer definition of what the policy is trying to achieve, how quickly it is trying to achieve it, and how funding it is prioritised against other tax and spending commitments.

“It seems somewhat incongruous that the government is committing to maintain a policy that increase the cost of the State Pension while simultaneously cutting the tax that notionally funds it.”

Canada Life director of retirement income Nick Flynn warned that a “proper debate” is needed on the future of the state pension due to the anticipated changes in our population.

“Improvements in life expectancy have slowed, and in many areas of the country gone into reverse,” he said.

“The ratio of state pension claimants to workers is expected to change significantly, and if we see this shift in the ratio of workers to retirees this will clearly have significant implications around any debate on the future funding of the state pension.”