Government is committed to pensions triple lock, Downing Street insists
The Government is committed to the pensions triple lock, Downing Street has insisted, following speculation about its future.
The triple lock guarantees that the state pension increases in line with inflation, earnings or 2.5% – whichever is higher.
But strong recent growth in earnings and inflation have prompted concerns that sticking to this guarantee will be problematic.
With average earnings data showing a rise of 5.6%, and the Consumer Prices Index (CPI) measure of inflation hitting 2.1%, the process of setting a new state pension for April 2022 is likely to be expensive.
The earnings data is artificially high because a year ago wages were depressed with many people being furloughed.
Yes, we’re committed to the triple lock
Sir Steve Webb, a former pensions minister, had suggested that the Government may end up “fudging” the figures to scale back a multibillion-pound state pension hike.
This could include measuring underlying earnings growth without the distortions or applying the triple lock formula over a two-year period, which would mean that this year’s earnings surge would be partly offset by last year’s earnings fall, he said.
The Prime Minister’s official spokesman said on Thursday: “Yes, we’re committed to the triple lock.”
He added: “There is still significant uncertainty around the trajectory of average earnings and whether there will be a spike as has been forecasted. Our focus is to ensure fairness both for pensioners and taxpayers.”
Commenting on the Downing Street statement, Sir Steve, who is now a partner at consultants LCP (Lane Clark & Peacock), said the Government may still find “wiggle room”.
He said: “Although the triple lock policy sounds crystal clear, the reality is that the Government could still find ‘wiggle room’.
“They could say they had stuck to the triple lock whilst measuring earnings in a different way or over a different period.
“The key economic variables will not be available until the autumn so the Government does not need to make a decision now, but I have no doubt that ministers will be presented with a range of options for getting off this very expensive hook whilst sticking to the spirit of their manifesto.”