The Treasury has pledged to reinstate the ‘triple lock’ on pensions next year, putting pensioners in line for a double-digit increase in their earnings next year.
Pensioners could be in line for an almost £1,000 boost to their annual earnings after a Treasury minister confirmed the triple lockdown will be used to calculate next year’s state pension increase .
Responding to a question in the House of Commons, Simon Clarke, Chief Secretary to the Treasury, said: “Next year the triple lockdown will apply to the state pension. Subject to the Secretary of State’s review, pensions and other benefits will be revalued by the September CPI which, according to current forecasts, is expected to be significantly higher than the inflation rate forecast for 2023/24.
The triple lockdown means state pensions rise at the height of inflation, wage growth or 2.5% each year. However, Chancellor Rishi Sunak suspended engagement for the most recent review after the earnings growth figure was made abnormally high by the pandemic and furlough programme.
Confirmation of the end of the temporary freeze will come as a relief to retirees, many of whom are struggling with skyrocketing food bills and costs.
With the reinstatement of the triple lockdown, state pensions are likely to be determined by the scale of price increases. Inflation has already climbed to 9% and the Bank of England expects the rate to top 11% by October.
The government will spend an extra £10billion on state pension payments if inflation hits 10% by September, when the next increase is decided.
The Prime Minister’s official spokesman denied that a one-off increase in pensioner incomes would be inflationary despite ministers’ warnings about the impact of strong wage growth on prices. The spokesperson said: “I think the Chancellor needs to look at everything as a whole and I think we can deliver on that commitment without fueling those inflationary pressures.”
The Bank of England’s forecast in May suggests inflation will hit 9.5% in September, but its policymakers have since warned that price pressures will be even stronger than expected.
A 10% increase would increase state pension income by £18.50 a week, an increase of £962 a year.
The government spent £110.6billion on state pensions in 2022/23.
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This notice was published: 2022-06-21 12:47:48