House of Lords votes to retain pension triple-lock next year

The House of Lords has voted 220 to 178 in favour of retaining the state pension triple-lock next year.

The amendment would back using an adjusted earnings measure “to take account of the exceptional impact of the COVID-19 pandemic on the level of earnings”.

However, ministers are likely to reject amendment and stick to plan to reinstate triple-lock in 2023.

The government is expecting to save £5.4bn in 2022/23 following the decision to increase the state pension by the 3.1% inflation figure, rather than July’s 8.3% earnings growth figure.

If the state pension rises in line with September’s 3.1% inflation figure in 2022, the basic state pension will rise by £4.25, from £137.60 per week to £141.85 per week, while the flat-rate state pension will rise by £5.55, from £179.60 per week to £185.15 per week.

If the earnings element of the triple-lock had been retained and the state pension was to increase by 8.3% next year, however, this would have increased the basic state pension to £149 per week and the flat-rate state pension to £194.50 per week.

AJ Bell head of retirement policy, Tom Selby, commented: “Scrapping the state pension triple-lock – a Conservative manifesto commitment – for one year was always going to be controversial, with pensioners set to miss out on a post-lockdown 8.3% boost in their retirement incomes.

“While a 3.1% inflation increase is better than nothing, with prices expected to rise by 4% over the next 12 months this is likely to feel like a cut in real terms for millions of retirees.

“However, the Government has already banked over £5 billion a year in annual savings from the move and so is highly unlikely to budge from its position.

“If the triple-lock were to be retained, the revised earnings measure would likely need to save the Exchequer almost exactly the same amount of money as scrapping the triple-lock – meaning the net impact on those in receipt of the state pension would in any event be relatively small.”

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