The future of the triple lock is something many financial experts have expressed concerns about following the financial impact of the coronavirus pandemic. UK lockdown measures are still in place, impacting millions of people and their household finances.
There has been speculation the Chancellor and Prime Minister Boris Johnson could replace the triple lock with a lock to average earnings or inflation (or both).
Tom Selby, senior analyst at AJ Bell, said: “While the Chancellor and PM may have agreed to stick by their triple tax lock pledge, there are no such guarantees yet over the state pension triple lock.
“The policy, introduced 10 years ago, guarantees the state pension increases in line with the highest of average earnings, inflation or 2.5 percent.
“For 2021/22 that means a 2.5 percent increase in the flat-rate state pension from £175.20 a week to £179.60 a week.
“This promise comes at a price, however, with the OBR [Office for Budget Responsibility] estimating maintaining the triple lock would cost £6billion more than a straight CPI inflation lock and £3.2billion more than a lock to average earnings.
“Abandoning or watering down this manifesto pledge would undoubtedly be unpopular – particularly among older voters – although given the circumstances it could probably be justified.”
Salman Haqqi, personal finance expert at money.co.uk, commented: “In 2010, the UK government introduced a ‘triple lock’ for state pensions, in order to guarantee that the scheme would not lose its real world value over the coming years.
“However due to the continued economic uncertainty caused by COVID-19, there has been some debate in parliament regarding the policy.
“There is current speculation from opposition MPs, claiming that a change to state pensions will be announced by Chancellor Rishi Sunak in the upcoming spring budget.
“Under current regulations, you will receive different amounts depending on whether you get the new state pension or the basic state pension.
“Which state pension you are eligible for is based on when you were born and when you retire.
“If you’re a man born before April 6, 1951 or a woman born before April 6, 1953, have been paying National Insurance for 30 years, and reach state pension age before April 6, 2016, you would get the full basic state pension of £134.25 a week.
“However, if you’re a man born after April 6, 1951 or a woman born on or after April 6, 1953, have been paying National Insurance for 35 years, and reach state pension age after April 6, 2016, then you’d receive the full new state pension of £175.20 a week.
“Currently, the triple lock on the state pensions means it will increase in line with inflation (or by 2.5 percent, whichever is higher).
“However given the ageing population in the UK, some believe this promise is unsustainable in the long term.
“With the Spring Budget announcement just weeks away, it is essential that those relying on a state pension keep up to speed with any changes made by the Chancellor, in order to safeguard their income.”