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Question over triple lock

Pensions to rise by above inflation for third year

pension pot 2

Pensions will rise by just over £4 a week

Pensioners are in for another inflation-busting rise next year after the latest cost of living data was published.

The State Pension is set in September by the ‘triple lock’ which is the highest of earnings growth, price inflation or a 2.5% minimum guarantee.

Inflation was announced today as 0.5%. The earnings growth figure (for July), was minus 1%. So the 2.5% guaranteed increase will kick in, offering pensioners 2% above inflation.

A pensioner on the full new state pension of £175.20 per week will receive an increase to £179.60 or an extra £4.40 per week.

However, pensions industry experts are expecting the Chancellor to review the triple lock in view of the current pressure on public finances.

Steven Cameron, pensions director at Aegon, said: “Pensioners are set for another inflation-busting increase to their state pension next April, making it three years in a row.

“Since April 2019, the state pension has received an above inflation increase with the 3.9% increase in April 2020 2.2% higher than price inflation and next year’s exceeding inflation by a further 2%. 

“While this will be welcomed news in a difficult climate for pensioners, concerns remain over both the affordability and intergenerational fairness of maintaining the triple lock.

“The state pension is not funded in advance but on a ‘pay as you go’ basis from today’s workers’ National Insurance contributions.

“The Chancellor will no doubt be facing difficult decisions over whether he can afford to retain the triple lock as he supports the economy through wave two of the pandemic and looks ahead to getting the nation’s finances back on track.”

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