State Pension  

Why we need the triple lock back in 2023

It opted for the latter and so the state pension rise in April 2022 is likely to be whatever the rate of CPI inflation turns out to be in the year to September 2021 – probably in the range of 3 to 3.5 per cent.

What was much less certain was whether the break in the triple lock would be a one-off or a permanent measure. There can be little doubt that almost since the triple lock was first introduced a decade ago the Treasury has wanted to get rid of it. And I have no doubt that there will have been pressure from the Treasury to use the opportunity presented by the pandemic to kill it off once and for all.

The triple lock is set to pause for one year

It is therefore something of a relief, at least for those of us who believe that the state pension is still too low, that the government has made it clear that the triple lock is being paused for one year only and will then be reinstated.

There are those who feel that pensioners have been the winners of life’s lottery in recent years, particularly the recently retired, who may have benefited from rapid house price inflation, free university education and possibly being the last generation to enjoy gold-plated private sector defined benefit pensions.  

However, pension policy is not just about those who have already retired, it is about those who have yet to retire. Many of those retiring in the coming decades will have far less in the way of final salary pension provision than previous generations, while the impact of auto-enrolment in building up defined contribution pension pots will take a long time to be felt. 

State pension crucial

For this group, and for women in particular who are even less likely to have a large final salary pension, the state pension is absolutely crucial.

It is easy to forget that the triple lock was introduced after a 30-year period when the basic pension was generally pegged only to price inflation. As a result, the real value of the pension had shrunk steadily as a share of the national average wage and had become one of the lowest in the developed world.

Although 10 years of the triple lock has helped to stabilise the situation there is still a long way to go. You cannot undo 30 years of damage in 10 years.

For that reason, I am pleased that the triple lock seems set to be with us for some years to come, despite the one-year suspension of the policy announced this week.