In Sunak’s statement this afternoon (May 26), in which he unveiled measures to tackle the cost of living crisis, he reassured people that next year benefits will be uprated using the consumer price index, stating that the triple lock will once again apply for the state pension.
The government temporarily suspended the wages element of the pensions triple lock for 2022-23 to avoid a disproportionate rise of the state pension following the pandemic.
Under triple lock, the state pension is increased by the highest of earnings growth, price inflation or 2.5 per cent a year.
Last year there were concerns the triple lock would lead to the state pension rising by an artificially high amount because earnings growth was abnormally high due to the return of many workers from furlough after lockdown.
Therefore this April the state pension only increased by 3.1 per cent, which was September’s CPI figure.
But inflation is now running a lot higher, reaching a 40-year high of 9 per cent for April and it is predicted to reach 10 per cent later this year.
Therefore if the triple lock is kept, and inflation keeps rising, pensioners could see a bumper increase to their state pension.
Steven Cameron, pensions director at Aegon, said that had the state pension increased by 9 per cent, someone entitled to the full rate would have been receiving a weekly state pension of £195.75 a week, £10.60 above the actual level of £185.15.
He added: “Pensioners will be reassured by further confirmation of the government’s commitment to re-instate the state pension triple lock.
“If September’s inflation rate is 10 per cent, this will mean an increase in the state pension of £18.50 per week from April 2023.”