With the cost of living soaring, many had hoped the Chancellor Rishi Sunak would announce the state pension triple lock would be reinstated at his Spring Statement today. However, this did not transpire.
The news comes hours after the rate of inflation was confirmed to have risen once again, up to 6.2 percent.
Pensioners will now receive an increase to their state pension of exactly half that rate in a matter of weeks.
After receiving criticism for his handling of the state pension as it pertains to the triple lock, Mr Sunak said on Wednesday that due to the Conservatives introducing the triple lock policy: “Pensions are now £2,300 higher than they were in 2010 and £700 more than if the triple lock hadn’t been in existence during that time.
He continued “The state pension, relative to earnings, is at the highest level it has been in over 30 years. This party will always be on the side of pensioners.”
The state pension triple lock is designed to ensure pensioners can maintain their spending power as the cost of living rises.
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Average earnings growth meant the state pension was set to rise by more than eight percent from April 2022, but the Government made an adjustment to the triple lock to prevent this.
The earnings link was removed temporarily for the 2022/23 tax year as it was believed to be artificially inflated by a huge number of Britons returning to work from the furlough scheme.
By deciding not to honour the triple lock in its traditional form, the Government broke a promise from their 2019 manifesto.
The rate of inflation to September 2021 will therefore be used to boost the state pension next month instead, which came in at 3.1 percent.
However, inflation has soared even higher in the months since the increase was locked in, culminating in today’s astronomical figure.
The rise in the cost of living is outpacing the increase to the state pension, meaning pensioners are set to lose money in real terms.
On the Spring Statement, Henry Tapper, Executive Chair AgeWage and Pension Playpen All Star, said: “This statement is shocking news for pensioners.
“I am really saddened by the omissions in this budget which provides a little help for those earnings between £12,750 and £35,000 but no help at all for those living on benefits -especially pensioners in poverty who will suffer most from energy price increases.”
“Pensioners will have their worst year for living standards since records began in 1956 with household disposable income falling faster than at any time in the last 70 years. They will not get any benefit from the national insurance threshold as they don’t pay national insurance.
“They will only get a 3.1% increase on their state pension and they will face at least 7.4% inflation.”
Mr Tapper believes the poorest people in the UK will continue to struggle.
He concluded: “For the working age poor, those claiming universal benefit, there is only the memory of the £20 weekly uplift , nothing new. Those on universal credit will be getting less to meet bigger bills.
“Employers and employees will still have to pay more national insurance from April and for employers, there is no respite, they will not get an increase in their national insurance threshold.
“Even the 2024 income tax cut is offset by there being no increases in income tax thresholds in the meantime. This is the Government kicking the walking sticks away from our elderly poor.”
Steven Cameron, Pensions Director at Aegon said: “Pensioners received little in the way of good news from the Chancellor in his mini Budget. There was nothing new in the way of temporary support specifically for this group, and no improvement on the 3.1 percent increase in the state pension from next month, which is just half the current rate of inflation.”
Mr Cameron also pointed out that as people above state pension age don’t pay National Insurance on earnings, they won’t benefit from the £3,000 increase in the National Insurance threshold.
He suggested: “One possible help could have been to offer a bigger increase to the state pension this April in return for a lower rise next April. For example, the Chancellor could have raised this year’s increase by 2.5 percent to 5.6 percent to bring it closer to the current rate of inflation, then granting 2.5 percent less than whatever the triple lock rise would have been next April.
“The triple lock pays the highest of earnings increases, price inflation or 2.5 percent. So if, as is being predicted, price inflation were eight percent next September, state pensioners would still have received 5.5 percent next April. It would have meant their state pension from April 2023 would have been the same, but they would have benefitted from an extra 2.5 percent for the next 12 months.”