Pensioners, rest easy. The triple lock on state pensions looks like it’s here to stay – for now at least – which is good news for everyone currently receiving a pension or planning on retiring in the near future.
What is the ‘triple lock’?
The term ‘triple lock’ refers to three protections in place to ensure the consistent growth of state pension payments. Pensions will rise by whichever of three key markers is the highest: the rate of inflation, average earnings or 2.5%.
The latter part has been up for much debate and is considered too generous by many in and around government. There have been many rumblings in the media that it would likely be dropped, perhaps creating a ‘double lock’ system instead, or indeed something totally different.
Why was it at risk?
Previous pensions minister Baroness Altmann had said that the triple lock system was unsustainable and that – should we enter a period of negative inflation – would make little sense by disproportionately rewarding the older generation.
With so many changes on the political landscape (such as the Brexit vote and a brand new Prime Minister) there were bound to be uncertainties thrown up, but as Altmann steps aside in the reshuffle amid rumours of the triple lock being cast aside, there is a ray of light for pensioners: a spokesman for Number 10 has said: “The [2015 election] manifesto contains a commitment to protect the triple lock [until 2020]. That commitment still stands.”
The BBC quotes said charity Age UK director, Caroline Abrahams, celebrating the news by saying: “Research shows that the state pension is still the largest single source of income for most older people in the UK, with the vast majority having contributed to it throughout their long working lives.”
At DPT we would always add that the state pension is generally unlikely to be sufficient for retirees to continue with the same standard of life they had while working, and that acquiring an additional pension – be it workplace or otherwise – would be a wise decision. Speak to one of our experts for more retirement planning advice.