With inflation at its highest in 40 years uncertainty surrounds the pensions triple lock.
Here is a look at how the triple lock normally works and what difference it could make to pensioners.
– What does the triple lock do?
The triple lock guarantees that the state pension rises every year in line with inflation, earnings or 2.5% – whichever is highest.
September’s inflation figure, at 10.1%, would normally be part of the calculation.
The policy is supposed to help ensure pensioners’ living standards do not fall too far behind those of the wider population.
More than 12 million people receive the State Pension.
– What has happened to the triple lock?
The triple lock was previously paused for a year meaning pensions rose by just 3.1% this year – already behind inflation.
– What is happening now?
Prime Minister Liz Truss had previously stated she was committed to the triple lock but her government, led by Chancellor Jeremy Hunt, has since refused to repeat that 2019 General Election manifesto pledge.
– Why would axing the triple lock be controversial?
It was a Conservative manifesto pledge and its previous suspension had been viewed as a one-off due to the pandemic.
Ditching the promise would affect some of the most vulnerable people in society, many of whom live on fixed incomes, as high inflation wreaks havoc with household budgets.
– What impact would there be in cash terms if pensions rose in line with earnings next April instead of inflation?
If pensions rose by 5.5%, in line with earnings, the weekly new state pension would be £195.35.
But if if they rose in line with Consumer Prices Index (CPI) inflation, at 10.1% it would be £8.50 per week higher, at £203.85.
This would add up to a difference of £442 over the course of a year.
