Sunak confirms triple lock will be reinstated
State pensions will rise above £10,000 a year for the first time after Chancellor Rishi Sunak confirmed earlier government commitments that the triple lock will be reinstated next year.
Mr Sunak told the Treasury select committee on Monday night that from April 2023 he would re-apply the triple lock which sets rate at the highest of earnings growth, price inflation or 2.5% in September.
With inflation likely to be about 7.4% at that time It means retirees can expect a bumper increase.
Mr Sunak had faced widespread criticism after suspending the formula for this year because the surge in earnings as the economy reopened after the lockdown would have forced a pensions rise of about 8%.
Instead, he pegged pensions to a 3.1% rise next month, which is below the current rate of inflation.
Tory MP Harriett Baldwin asked the Chancellor: “For pensioners this year, you’re guaranteeing the triple lock again?”
Mr Sunak replied: “Yes.” Asked what the Treasury was budgeting for the pension rise, he added: “It will be whatever the estimated Consumer Price Index is in September – seven-ish percent.”
Aegon pensions director Steven Cameron said its reinstatementwas a positive move for pensioners.
“The chancellor has given state pensioners further assurances that next April, they’ll benefit from the full state pension triple lock.
“The work and pensions secretary had already made a similar commitment, but pensioners will be relieved to hear this repeated by the chancellor who ultimately holds the purse strings.”
The announcement comes after the government temporarily moved to a ‘double lock’ from the April 2022 increase because of pandemic related distortions in national average earnings.
The increase in April 2023 will be the highest of earnings growth, price inflation or 2.5%. The inflation figure used will be for the year to September 2022 and is widely expected to peak in the Autumn at more than 8%.
“This could well provide state pensioners with their biggest increase ever and will allow them to catch up for this year’s relatively low increase,” said Mr Cameron.
Mr Sunak also defended his recent Spring Statement following widespread criticism that it failed to do enough for pensioners and households hit by the cost-of-living crisis.
He told MPs that “irresponsible” borrowing levels risked stoking inflation even further, adding to the pressure on living standards.
His comments followed a speech by Bank of England governor Andrew Bailey on the rising cost of living.
He said: “This really is an historic shock to real incomes. The shock from energy prices this year will be larger than every single year in the 1970s.”