What the lock? Triple, double – let us explain the jargon

You’d be hard pressed to be unaware that we’re fully into election season right now, with all the major parties trumpeting their promises for a brighter future.

The incumbent government is – as part of existing pledges of fiscal reform – considering a change on the way state pensions are calculated. You may have heard this in the media referred to as changing from Triple Lock to Double Lock.

A lot of people planning retirement may ask a very reasonable question: what does this mean?

Triple Lock

In 2010 the coalition government of Conservative and Liberal Democrats introduced a rule which guaranteed to increase the state pension annually by whichever was highest:

  • Inflation or
  • Average earnings or
  • A minimum of 2.5%


Double Lock

This is likely to come into force in 2020 and will remove the 2.5% minimum, leaving state pension increases governed by whichever is greater:

  • Inflation or
  • Average earnings


What it means for retirement funding

£106.08 is the extra annual income per pensioner thanks to the triple lock, compared to a theoretical situation where the double lock had instead been introduced back in 2010.

Naturally, no-one can truly predict the future and extreme changes in the national or global economic position may drastically influence pension funds and how they’re paid out. But, on the assumption that things will stay broadly business-as-usual, you can expect that the removal of the triple lock will mean a decrease in the annual rise of the state pension and a less rosy future for anyone relying – or planning to rely – on the state pension alone.

Our advice would be simply not to expect the state pension to take care of you in retirement. Proper advance planning can mean a more comfortable later life and you should always seek the advice of a specialist financial services firm which can point you in the right direction.

According to The Telegraph, “in the intervening seven years since the lock was added, pensioners’ incomes relative to the working population – who have seen minimal salary rises since the financial crisis – have improved considerably,” hence the desire from government to even the playing field as well as save a considerable amount of money.

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