The UK STATE PENSION TRIPLE LOCK could be about to break as we see a significant increase in average earnings having just been announced.

⚡ Well, there we have it... just announced, the rise in the State Pension will be 2.5%. More of a double than triple lock!

Speaking in the house of commons today, Secretary of State for Work and Pensions Therese Coffey said that, 'as average earnings are now rising in the wake of the pandemic and furlough scheme, the government will lock payments at the higher of inflation or 2.5%'.

It does in effect downgrade the triple lock.

But Coffey told MPs it would be inappropriate to apply the full rules this year because the 8% expected rise in UK earnings due to the government’s furlough scheme would make its effects ‘unfair’.



‘The triple lock policy was never anticipated in these unprecedented times. It was simply not designed for this situation; pensioners are wise in this country and a statistical anomaly is not the base for a rise this year,’ she said.


The triple lock will return to its original set-up in 2022/23.

Let me know your thoughts...

We know very well that the UK state Pensions purchasing power is protected by a triple lock that has been in place since around 2010. It was put into place by the government to guarantee the State pension would not lose value in real terms. However, the pandemic has led to wild swings in the economy with knock on effects on prices and on earnings. And with the current data, the treasury is looking at a potential multi billion pound bill.

Based on the current data this looks set to be an increase of 5.6% according to analysis by former pension minister, Steve Webb. Bear in mind that the total cost of the state pension is currently around £100 billion per year and it is structured on a pay as you go basis. There is no big fund or investment that this money is taken from it simply relies on incoming mostly via National Insurance contributions to pay for the current retirees. So could this be the end of the triple lock guarantee?

The triple lock protection is the higher of the following amounts:

The percentage increase in consumer price inflation
or
The percentage increase in average earnings in the year compared with the same quarter a year earlier
or
A floor of 2.5%

Video on how to check your State Pension Age and Forecast:
   • UK STATE PENSION AGE & FORECAST - How...  

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