What is the pension triple lock?

Rishi Sunak has not committed to maintaining the triple lock on state pensions  (Kirsty O’Connor  /PA)
Rishi Sunak has not committed to maintaining the triple lock on state pensions (Kirsty O’Connor /PA)

Rishi Sunak has not committed to maintaining the triple lock on state pensions in the next Conservative manifesto.

Speaking to reporters during his trip to the G20 summit in India, Prime Minister Rishi Sunak said: “We’re not going to speculate on the election manifesto now. I’ve got plenty to get on with between now and then.

“But the triple lock is the Government’s policy and has been for a long time.

“I’m not going to get into our manifesto now but the triple lock has been a longstanding policy for us.”

Earnings growth figures released on Tuesday for the May to July 2023 period will likely determine next spring’s increase in the state pension for the UK’s 12 million pensioners.

It is thought that the Government will confirm that the triple lock on state pensions will remain in 2024, which will significantly increase retirees’ purchasing power.

The state pension triple lock requires that it be raised annually in accordance with whichever of the following three measures is the highest: Average annual wage growth measured from May to July; inflation recorded in the year from September, or 2.5 per cent.

As a result, when the state pension is modified in April 2024 in line with inflation, it is anticipated to rise by almost seven per cent.

But what is the pension triple lock and when does state pension increase?

What is the pension triple lock?

First introduced by the Conservative and Liberal Democrat coalition government in 2010, the pension triple lock is a Government guarantee that state pensions grow each year in line with whichever is highest out of earnings, inflation — as measured by the Consumer Prices Index (CPI) — or 2.5 per cent.

This means pensions rising in line with the inflation rate in April next year.

The CPI inflation for September stood at 10.1 per cent, according to the latest figures from the Office for National Statistics. Average earnings have risen by 5.4 per cent year on year.

In its 2019 election manifesto, the Conservative Party said it would keep the triple lock in place for the duration of this Parliament.

When does state pension increase?

Every tax year, on April 6, the State Pension is increased based on a number of criteria.

The amount the State Pension increases is determined by what is highest out of the consumer price index (CPI) measure of inflation (measured for September the year before), average earnings between May and July of the previous year and 2.5 per cent.

Will the triple lock remain in 2024?

Given that both the Conservatives and Labour are expected to make a commitment to the policy in their election manifestos, the future of the triple lock on the state pension is likely to be secure.

Jeremy Hunt will formally reveal the state pension's exact level for 2023–2024 in this year's Autumn Statement.

How does the state pension triple lock affect me?

The triple lock is restored for the remainder of this Parliament, which ends in 2024.

The current Chancellor, Jeremy Hunt, previously confirmed that the triple lock will be protected, meaning pensioners will also get a rise in the State Pension and the Pension Credit in line with inflation.

The triple-lock guarantee was initially introduced to ensure pensioners did not see any rise in their state pension being overtaken by the rising cost of living.

How much is the current state pension?

Men and women are currently entitled to the state pension at the age of 66, but this is scheduled to rise.

State pension comes in two tiers — the basic state pension (bSP), which is based on a person’s National Insurance contribution record, and the additional state pension is partly earnings-related.

Future pensioners who turned 66 on or after April 6, 2016, will receive the new state pension (nSP).

The full, new flat-rate state pension (for those who reached state pension age after April 2016) is £179.60 a week.

The full, old basic state pension (for those who reached state pension age before April 2016) is £137.60 a week. They may also get a Pension Credit top-up.

Under pension triple lock, state pensioners would get a rise of about 10 per cent in April 2023, which would take their weekly payment to just over £200, alleviating some of the other pressures on their budgets during the cost-of-living crisis.