Inflation-U.K. pensioners anxiously awaiting to see if the government’s promise to reinstate the ‘triple lock’ on annual increases may not have to wait much longer.
One component of the state pension safeguard– earnings data – indicates wage growth for the May-July 2022 period came in at 5.5%, according to the Office for National Statistics (ONS). The figure, which is total pay including bonuses, is one indicator used to calculate pension uprating under triple lock. Another factor, September’s Consumer Price Index (CPI), comes out on 19 October. Following the recent trend–9.9% in August–that inflation number is expected to be somewhere around 10%.
Triple lock guarantees the value of state pensions will rise each year by one of these three measures, whichever one is highest:
- Wage Growth
Newly minted U.K. Prime Minister Liz Truss pledged to restore triple lock during the Tory leadership campaign, however, the final decision has not been made. The safeguard that ensures pensions do not lose value due to inflation was suspended last year because wage rises were distorted by the impact of Covid-19 on the recovering labour market. Although triple lock has overwhelming support from pensioners, recent polls indicate younger workers are questioning its affordability.
The Bank of England predicts inflation will continue to rise this year, which could mean some good news for retirees. September’s CPI is expected to be the highest of the three measures that will determine next year’s living standards for pensioners. If analysts’ forecasts hold and triple lock is reinstated, it would guarantee an estimated 10% increase – or more than £1,000.00 per year – in the pockets of millions of U.K. retirees when it takes effect in April 2023.
The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.
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