PensionsMay 3 2017

Pension triple lock worth just £2 extra per week

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Pension triple lock worth just £2 extra per week

Labour has pledged to keep the state pension triple lock, the Tories have not, yet according to analysis pensioners' benefit from the policy only by a couple of pound per week.

Pensioners get just £2.04 per week more from the implementation of the triple lock, according to according to consultancy Hymans Robertson.

Its analysis looked at the £97.65 per week state pension in 2010/11 and calculated what would have happened in three scenarios.  

It would have increased by 2017/18 to  £115.28 per week based solely on price inflation;  £120.26 per week if using a double lock of the higher of price inflation and earnings and £122.30 per week if using a triple lock (as is the case in reality) – (i.e. an additional £2.04 per week).

Originally introduced by the coalition government in 2010, the triple lock guaranteed to increase the state pension every year by the higher of inflation, average earnings, or 2.5 per cent.

The recent state pension review by John Cridland called for it to be scrapped the end of parliament.

The government has previously committed to keeping the triple lock in place until 2020. But the snap election means this timetable is no longer relevant. Labour has comitted to keeping the triple lock in place.

Discussing the cost of the triple lock to the government, Chris Noon, partner, Hymans Robertson said: “The total cost of the triple lock since its introduction seven years ago has been in the region of £1.8-£2bn.

"This is because there were three years (2013, 2015 and 2017) where the 2.5 per cent underpin has applied.  Given market expectations of inflation, it’s difficult to see a scenario where the cost of the triple lock is at all significant over the course of the next Parliament."

Commenting on the political implications he added: “As there are about 10 million voters in receipt of state pension, it seems politically and economically more sensible to maintain the triple lock.  At the very least for the course of the next Parliament.”

However, Fiona Tait, technical director, Intelligent Pensions, disagrees: "It is a question of balance, fairness and affordability. The priority is to maintain the spending power of older pensioners so a link to inflation alone would be sufficient."