Personal Finance

State pension warning as triple lock freeze to create ‘pinch point’ for pensioners


State pension payments are vital for older people, but they will not rise in the expected way this year. Usually, the state pension increases based on the triple lock mechanism, by whichever is the highest of average earnings, 2.5 percent or inflation. However, warped earnings data due to COVID-19 would have meant a potential state pension rise of eight percent come April.

Consequently, the Government has implemented a temporary freeze, and will only increase the sum by 3.1 percent this year.

Many pensioners have expressed their dissatisfaction with this measure, wanting a higher rise.

Express.co.uk spoke exclusively to Andrew Tully, technical director at Canada Life, who discussed the implications for pensioners.

He said: “Such a large increase in state pensions in one year was never going to be realistic.

READ MORE: Pensioners missing out on thousands of pounds a year – check now

However, with cost of living soaring this winter, it could be more than discontent for pensioners, according to the expert.

The cost of living crisis is continuing to spiral, with households facing rises in prices.

Indeed, bills and taxes are also set to rise, creating a squeeze on people right across the country. 

Mr Tully added: “The bigger issue of the removal of the triple lock is the cost of living crisis.

“Despite the state pension increasing by 3.1 percent in 2022, inflation for October was 4.2 percent.

“All the signs are it will remain higher than the Bank of England target of two percent for some time to come. 

“This creates a real pinch point for people on fixed incomes, including pensioners, who are feeling the effects of higher household bills.”

This week the Institute for Fiscal Studies (IFS) has argued benefits should rise to match the soaring cost of living for millions of people.

Raising the state pension as well as benefits to the same level as inflation would prevent a £290 real-terms fall in benefit income year on year for the group, it has been asserted.

The Government has said: “The Government is committed to protecting the incomes of pensioners, as well as being fair to taxpayers. 

“We are introducing legislation this year to increase the basic and new state pensions by at least the higher of price inflation or 2.5 percent. 

“We are setting aside the average earnings measure this year because it has been distorted by falls in earnings last year and the unusual labour market effects this year, both caused by the pandemic. 

“This is a one-year response to exceptional circumstances. The Government remains committed to implementing the triple lock for the remainder of the Parliament.”

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