Return of triple lock for pensions in 2023-24
22nd June 2022 08:10
by Rebecca O'Connor from interactive investor
Our head of pensions and savings comments on inflation nudging higher after the government confirms that the triple lock will apply to state pensions next year.
Energy bills continued to drive prices higher in May, according to the Office for National Statistics (ONS), with annual CPI inflation rising to 9.1% in May from 9% in April, according to data published this morning.
Petrol and food price rises were also behind the overall increase. The inflation figures come a day after the government confirmed that the triple lock, which guarantees state pension rises in line with inflation, wage rises or 2.5%, would be used this year to increase the amount of benefit paid to pensioners. The government uses September’s inflation reading to determine the figures it will use for the following year's increase.
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This year, pensioners suffered a below inflation increase in their pension because the government removed the triple lock for one year to avoid an 8.1% increase in line with wage growth, giving pensioners a 3.1% rise instead, which has since been dwarfed by further rising prices.
An inflation figure of around 10% in September would result in the amount someone on the full new state pension receiving £10,590 a year, up from a current level of £9,627.
Becky O’Connor, Head of Pensions and Savings, interactive investor, said: “Anyone dependent on a state pension will be scraping the bottom of the barrel to survive this year’s huge increases in the price of essential goods.
“Next year, they are likely to see a rise in line with inflation, but that won’t help them until April 2023 and won’t make up for the deficit they continue to face this year as they struggle to heat their homes and put food on the table.
“High inflation of basic goods affects low-income households, such as those reliant on the state pension, more than higher-income households. Increasing the state pension in line with price rises is an absolute must to prevent poverty among those who have stopped working.”
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