Pensioners could be denied the £902 increase they expect from April as officials consider adjusting triple lock calculations
- According to the ‘triple lock’ promise, pensions should rise by 8.5 percent next year
Pensioners could be denied the full £902 a year increase they expect from April as Whitehall officials consider adjusting the figures used to calculate it.
Earnings growth figures published yesterday confirmed that the state pension should rise by 8.5 percent next year under the ‘triple lock’ promise, which guarantees an increase in line with the highest rate of inflation, wage growth or 2.5 percent.
But officials have warned that the government is looking at plans to avert the full increase. They claim that the figures are artificially high and ‘distorted’ by one-off public sector bonuses and wage agreements.
These disruptions are estimated to have inflated wage growth by 0.5 to 1 percentage point, Whitehall officials say. The government could choose to scrap bonuses paid to NHS staff and civil servants, a move that could save the Treasury hundreds of millions of pounds.
The Office for National Statistics said yesterday that profit growth had been ‘impacted’ by one-off payments between June and August.
Earnings growth figures published yesterday confirmed that the state pension must rise by 8.5 percent next year under the ‘triple lock’ promise
An all-new state pension – typically offered to those who reached state pension age after April 2016 – could rise from £203.85 a week to £221.20 next year
As a result, pensioners could receive up to £105 less than they expect if the state pension rises by 7.5 per cent instead of the full 8.5 per cent.
Former Pensions Secretary Sir Steve Webb, a partner at consultancy LCP, said the move would not require any changes in the law because Work and Pensions Secretary Mel Stride has the power to define ‘income’.
Technically the government would not break the three-way lock, Mr Webb said, but it would be an “obvious fiddle”.
He added: “I would be surprised if the top-up was lower than normal the year before the general election. It would be a clear hassle with the numbers.
“They can’t just use a new figure if it’s not the one they want.”
Last year ministers denied pensioners what would have been a record rise by suspending the triple lock as inflation soared to a 40-year high.
It came after the government identified ‘distortions’ in profit growth figures as workers emerged from the Covid furlough scheme. In April 2022, the AOW increased by 3.1 percent instead of the expected 8.1 percent.
An 8.5 per cent increase next year would cost the Treasury £8 billion, increasing the state pension by £17.35 a week to £221.20.
The Chancellor will announce the decision in his autumn statement next month.
Steven Cameron of pension provider Aegon said that ‘it would be a brave government to manipulate the figures before the general election’.