Govt to scrap pensions triple lock in 2022/23

The government has confirmed it is scrapping the earnings element of the pensions triple lock.

Work and Pensions Secretary, Therese Coffey, today told MPs that a temporary one-year adjustment will be introduced for 2022/23. The flat-rate and basic state pension will instead increase by either the rate of inflation or 2.5%, depending on which is highest.

The decision comes just a day after the Treasury Select Committee had called on the Chancellor to suspend the wages growth mechanism of the triple lock.

Office for National Statistics (ONS) data shows that average weekly earnings were 8.8% higher in the three months to June in 2021 than they were over the same period last year, when millions of UK workers were furloughed during the first coronavirus lockdown.

AJ Bell senior analyst, Tom Selby, highlighted that the cost of the state pension triple lock risked “ballooning” if average wages were to come in at 8% or higher for the three months to July.

“The Office for Budget Responsibility estimates every one percentage point increase in the state pension costs the Treasury about £900m,” Selby commented. “This would imply a cost of £7.2bn compared to freezing the state pension at the current level, versus a £2.25bn cost if it is uprated by 2.5%.”

He added: “The decision to scrap the state pension triple lock for 2022/23 was undoubtedly linked to today’s social care announcement, with Prime Minister Boris Johnson keen to ensure that, optically at least, both younger and older voters are sharing the burden of coronavirus-related costs.

“Whether or not voters will forgive the government is another question entirely, however. Research carried out by AJ Bell yesterday suggested just 8% of people support any change to the triple lock – although it is possible this particular piece of bad news will be largely buried by the national insurance hike announced earlier today.”

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