Interactive Investor

Call for suspension of earnings link in state pension triple lock

6th September 2021 13:40

Rebecca O'Connor from interactive investor

interactive investor comments on the suggestion by the Treasury committee chair.

Responding to a call from the chair of the Treasury Select Committee for the chancellor to temporarily suspend the earnings link in the state pension triple lock, Becky O’Connor, Head of Pensions and Savings, interactive investor, said: “The triple lock is a hugely valuable guarantee. Post-pandemic wage data risks causing an artificially large rise, so losing the earnings element of the lock temporarily to avoid an unfair increase in the state pension sounds sensible - in theory.

“However, in practice, there is a risk that any temporary measure becomes permanent. If the earnings element of the lock was lost for good, this could mean that pensioners’ living standards could fall behind those of the working population, in periods when wage growth genuinely exceeds 2.5% or inflation.

“If a change of this kind is to be made now, then a timeline for a commitment to return to the triple lock might provide reassurance that this element of the guarantee would not be gone forever.”

The state pension triple lock has been effective since 2012. Since then, the 2.5% measure has been used four times, while average earnings growth and CPI inflation have each been used three times, according to a government research paper.*

Notes to editors


These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.