Triple lock on state pension scrapped – here's how much you will lose...

[dutchman]

The state pension will rise by 10.1 per cent from next April after the Government confirmed it will stick by the triple lock promise.

After recent weeks, just how much can we trust/believe this? Truss hardly has a good record of delivering on her promises!

She's no longer even in a position to!

Rumour has it that Hunt planned to scrap the triple lock before Truss overruled him.

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Pensioners will still be poorer even with record triple lock increase, experts warn

Pensioners are likely to see a real-terms cut in their income even if the Government gives them a record triple lock income boost, experts have warned.

Those aged over 66 collecting the state pension will receive a 10.1pc uplift next April if Chancellor Jeremy Hunt sticks to the Conservative party manifesto pledge. But research suggests the increase will understate the true inflation rate faced by retirees.

This is because older households usually spend more on gas, electricity and food, which have recently surged in price.

Inflation for all households in October reached a 41-year high of 11.1pc according to Office for National Statistics figures released today.

Over-80s could experience inflation of 15pc this winter, according to think tank the Resolution Foundation.

It comes as speculation mounts about the fate of the “triple lock”, under which state pensions increase by the highest of average earnings, inflation, or 2.5pc.

Assuming Mr Hunt does not scrap the policy in Thursday's Autumn Statement, soaring inflation would boost next year's state pension up to £10,600 a year, or £8,121 for those who reached the pension age before 2016.

However, statisticians believe that the triple lock is less generous than it appears because it calculates inflation against the Consumer Prices Index (CPI), which puts more stress on wealthier households.

Analysis performed by the Royal Statistics Society (RSS) for The Telegraph shows that this measure has underestimated inflation as experienced by pensioners by more than 8pc since 2005.

When gas and electricity prices spiked in the last three months of 2021, the headline rate was between 0.5pc and 0.7pc too low.

The RSS’ Jill Leyland was critical of the policy of linking pension calculations to CPI. She said: “It doesn’t fit all purposes – it was developed for things like inflation targeting and international comparison.

“It treats all households as one big household in the economy and looks at what that big household spends on everything. And within that richer households will tend to spend more so they have a greater weight.”

On average, the yearly income of retirees is around £12,600 less than that of the working population.

It comes as new research from the Resolution Foundation found that over-65s have been hardest-hit by inflation this year, with the gap continuing to widen into 2023. This winter, price rises for the over-80s could be almost 50pc higher than that of younger age groups.

Sophie Hale, the think tank’s principal economist, said pensioners would “probably” see a slide in their living standards even if the triple lock was upheld.

She added that the issue would be more serious for poorer pensioners who did not have access to a private pension.

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Triple lock pensions could take hit to save £600m



State pensions may rise less than expected as ministers consider adjusting the “triple lock” to save more than £600 million.

Jeremy Hunt, the chancellor, is considering a tweak to the formula that would strip out bonus payments from the earnings figure used to calculate the state pension, which would reignite debate about the future of the triple lock policy.

While No 10 has insisted that the government is committed to the triple lock, Mel Stride, the work and pensions secretary, acknowledged that it was “not sustainable” in the long term because of spiralling costs.

The triple lock guarantees that the state pension, at present £203.85, will rise by the highest of inflation, earnings or 2.5 per cent. The Office for National Statistics revealed today that average weekly earnings rose by 8.5 per cent in three months to July, meaning pensioners had been in line for a rise of more than £17 a week.

However, the Treasury is said to be looking at using a lower figure of 7.8 per cent to trip out the effect of one-off bonuses given to more than a million NHS staff and civil servants over the summer.

One senior Treasury source said that excluding bonuses from the triple lock calculation was now under active consideration. “It is something that is naturally being looked at given the wider economic situation,” they said.“Officials are drawing up policy proposals for ministers, but at this point no final decision has been taken.”

After the ONS said that these bonuses had “affected” the headline 8.5 per cent rate, another Treasury source said that this had “distorted” the triple lock. “We have to look at it, the bonuses have distorted it,” they said.

The Institute for Fiscal Studies estimated that using the lower figure would save £630 million and cost many pensioners about £75 a year.

Stride did not deny that the measure was under consideration, saying there “clearly is a difference if you take into account the non-consolidated elements of pay in recent times, but these are all decisions that I have to take with the chancellor”.

He told BBC Radio 4’s World at One that he wanted to “get into the weeds” of the calculation, but insisted: “The overarching point about the triple lock is that we remain committed to it.”

However, after estimations that the triple lock could cost as much as £45 billion a year by 2050, Stride acknowledged: “We’ve known for a long time, that in the very, very long term, you’re absolutely right, it is not sustainable. But of course, what I’m dealing with is now and where we stand at the moment, is we remain committed to the triple lock.”

The state pension is poised to jump to above £220 per week from £203.85 next April, building on last year’s increase of more than 10 per cent, if the government commits to increasing it in line with earnings.

Fresh data released this morning showed that average weekly earnings, including bonuses, rose by 8.5 per cent in the three months to July, higher than expectations of 8.2 per cent. It is set to be the first time the state pension has risen in line with earnings in four years — it last did so in April 2020, when it jumped 3.9 per cent.

The earnings figures are the highest recorded in two years and have been pushed up by workers with high bargaining power being able to secure better pay and bonuses.

Treasury officials have suggested that the government may commit to uprating the lock in line with earnings growth excluding bonuses, to reduce the strain on the public finances ahead of Hunt’s autumn statement on 22 November. The decision to uprate pensions comes as the chancellor also faces tough choices on whether to abandon a longstanding policy to increase benefits in line with inflation.

[rebbonk]

This would be to fund tax cuts to his rich chums.

I doubt he's got the gonads to do it, as it would consign the Tories to the back benches for the foreseeable future.

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Sunak is handing out billions in so-called 'cost of living' payments to people on means-tested benefits who will never vote Tory as long as they live!

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Scrapping winter fuel allowance for most pensioners to pay for triple lock 'not happening'



Number 10 has said scrapping the winter fuel allowance for all but the poorest pensioners is now "not happening".

Earlier on Friday, Sky News revealed the option was under live discussion between No 10, the Treasury and the Department of Work and Pensions as a way to claw back some taxpayer funds from the elderly.

The prime minister is expected to fight the next election on a pledge to keep the pension triple lock despite its spiraling costs, and has been looking at various options to cut back welfare spending as he looks to pave the way for pre-election tax cuts, while also remaining committed to the pensions triple lock at the next election.

One government figure told Sky News that while the option was part of conversations about how to find savings in the welfare bill, No 10 didn't want to risk public speculation on such an "emotive" issue that had divided views across Whitehall.

"Mr Sunak was interested in the option, while the chancellor and work and pensions Secretary Mel Stride were less enthusiastic about means testing pensioner benefits," according to one person familiar with discussions.

One source told Sky News No 10 believes officials in DWP or the Treasury leaked conversations around the winter fuel allowance in order to "kill it off".

Government figures earlier told Sky News the prime minister "understands the politics" of the triple lock and knows he has no option but to recommit to it, given the importance of the pensioner vote to his campaign and the Lib Dem recommitment to the policy in recent days.

Labour is also expected to maintain the triple lock in its manifesto.

"Rishi understands the politics of the triple lock, although he thinks it's far from fair from an intergenerational point of view, so he's trying to redress that a little bit," said one government insider.

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Just to be clear, the winter fuel allowance is already "means-tested" since some pensioners receive much more than others.

Scrapping it would leave basic state pension recipients even worse off than they are already relative to those on other means-tested benefits such as Pension Credit.

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Triple lock for pensions to be in Tory manifesto, Jeremy Hunt says



Jeremy Hunt has said the Conservatives will keep the triple lock system to decide rises in the state pension if they win the election.

The chancellor confirmed the policy pledge, which means the increase in the state pension is the highest of average earnings growth, inflation or 2.5%.

He told Sunday with Laura Kuenssberg he was confident the "expensive" promise would be paid by growing the economy.

Labour said it was "committed to retaining" the triple lock.

However the party is yet to confirm if the pledge will feature in its election manifesto.

"We will set out those plans for our manifesto in detail," Labour party chair Anneliese Dodds told the BBC programme.

Mr Hunt confirmed the current triple lock system to decide how much the payments rise each year would "absolutely" remain if the Conservatives win the general election, which must be held by 28 January 2025, for the whole of the next parliament.

"When we came to office in 2010, pensioners were more likely to be in poverty than other income groups, now because of the triple lock that we introduced they are less likely to be in poverty," he told the BBC.

"I think that is a very important social change because unlike adults of working age, pensioners can't work, they have retired and so we need to respect that."

Mr Hunt said he realised continuing the policy would be an "expensive commitment", but added: "You can only make that commitment if you're confident that you're going to deliver the economic growth that is going to pay for it."

In response to Mr Hunt's confirmation, Liberal Democrat Treasury spokesperson Sarah Olney said the pledge was a "shameless election trick by the Conservatives" and claimed Mr Hunt was "yet again taking pensioners for granted".

Labour leader Sir Keir Starmer declined to say if the triple lock would be in his party's manifesto when asked by The Sun newspaper last week.

"We will have to see what the state of the economy is as we go into the election. We will publish all of our plans as we go in and answer that question, but I believe in the triple lock."

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Remember there are lies, damned lies and Tory election pledges.

They've already reneged on it once and there's nothing to stop them from reneging on it again.

Labour is at least being honest, admitting that it depends on the economic situation when they take over.

[rebbonk]

The Tories are realising that they've dropped a massive clanger by alienating the older generation. This is nothing more than a cynical ploy to regain some of that lost support. - It ain't gonna happen; Sunak and his rabble are toast due to the mess they've made of things over the last few years. Despite what politicians think, the electorate does remember things.

The idea of Starmer as PM scares the out of me, but I really don't see any alternative, at the moment.