Pensioners who thought that their state pension would be protected by the so-called ‘triple lock’ are furious that this promise is now to be broken.
Details of its axeing were announced last week as Boris Johnson unveiled his blueprint for NHS social care reform.
The idea behind the triple lock had been a noble one – to protect the household finances of millions of pensioners from the ever-rising cost of living.
Under the triple-lock guarantee, the Government promised to ensure the state pension would rise every year by the highest of consumer prices, the average increase in wages, and 2.5 per cent.
‘Low blow’: Ian Barratt believes the Government cares more about business (case study below)
Yet last week, the Government suspended it after refusing to hike pensions from next April by an expected 8 per cent – in line with wage increases over the past year.
Its justification was based on the distortion to wages caused by the pandemic and workers being furloughed during lockdown.
This suppressed wages, only for them to bounce back as the UK economy began to emerge from lockdown.
Therese Coffey, the Work and Pensions Secretary, referred to the situation as a ‘statistical anomaly’ – and that it would be unfair for pensioners to benefit from it.
Furthermore, most people who have been fortunate to keep their jobs throughout the pandemic have certainly not been enjoying bumper pay rises.
The promise would have cost the Treasury £3billion to fulfil. Yet the Government has decided to weasel out of it by dismantling the triple lock for a year. But having broken it once, there are fears it could just as easily break it again in the near future.
If the Government can do this, we can’t ever trust them again
By smashing a vow to keep the state pension safe with a cast-iron triple lock, many pensioners feel the Government sees them as ‘easy pickings.’
Retired journalist Ian Barratt, from Maldon in Essex, is among those who feels aggrieved by the Government’s decision to disband the triple lock.
He says: ‘This latest attack on the state pension is a particularly low blow. ‘When the Government allows multinational giants such as Amazon to get away with making obscene profits at the expense of the taxpayer – letting them pay a paltry amount of tax – you have to ask where its priorities lie.’
He adds: ‘Is it the old and vulnerable, who are less likely to complain, it cares about or is it big business? The rich get richer while the poor survive on a meagre state pension that in real terms continues to fall in value.’
Now 79, Ian – married to Iris, 77 – admits that they are among the more fortunate pensioners because they also have personal pensions that enable them to pay their household bills as the cost of living continues to rise.
But he is worried that the Government may undermine the state pension yet again if it is short of money.
He says: ‘We are told the triple lock is to be shelved for just a year – but how on earth can we trust the Government not to do the same thing again and again?
‘I am also worried about the young. I bet you that they will not be able to rely on a state pension to keep them comfortable when they reach old age.’
Retired air traffic controller Derek King understands why the triple lock has been broken – but also fears for those who survive on just the state pension.
The married 74-year-old, from Northampton, says: ‘We are fortunate because we have private pensions to top up our income, but for others it is a real struggle.
‘But I worry most about the younger generations, who have had to foot the bill for most of the costs of dealing with the pandemic.’
He adds: ‘If the triple lock is suspended for just a year to help keep a lid on costs, then this is a sacrifice we are willing to make.’
Jan Shortt, general secretary of campaign group National Pensioners Convention, says: ‘The oldest and most vulnerable in society are just an easy target. This also seems to be yet another step towards dismantling an already low state pension that leaves those dependent upon it living in near poverty.’
She adds: ‘Pensioners are already facing terrible financial hardship with the axeing of free TV licences for those aged over 75 – and soaring energy bills.
‘With many having to choose between heating the home, watching television or eating hot meals, this is a really cruel blow.’
The Government will now adopt a double lock – the higher of inflation or 2.5 per cent. With the latest figures showing that inflation is currently rising by only 2.1 per cent, state pension recipients should expect a 2.5 per cent hike to their weekly income from next April.
It might have added £7, hardly a king’s ransom
Dennis Reed of Silver Voices
But pensioners will have to wait until the Consumer Prices Index for September is released in the middle of next month – in case it creeps up above the 2.5 per cent mark – before learning of what they will actually receive. This figure is used to help calculate the pension rise in April.
The current flat-rate state pension for those who reached state pension age after April 2016 stands at £179.60 a week. So they might expect about £4.50 a week extra from April 2022 – about the price of a pint in a pub.
Those who retired earlier might be struggling on a state pension of just £137.60. But they should be claiming a pension credit top-up to take it up to £177.10 if single. They should also receive a similar extra sum from April.
The Government is also chipping away at the basic state pension in other ways. Recently, the retirement age was raised by one year to 66. And those born after April 1960 are going to see the state pension retirement age rise to 67. They may have age on their side right now, but those born after April 1977 will find that from 2044 they will only get a state pension at 68 – although this could be brought forward.
But one thing we can be sure of is that the state pension offers meagre pickings for those in old age. Anyone still working should ensure they are saving into a company or private personal pension so that it can top up their state pension at retirement.
Dennis Reed, director of the campaign group Silver Voices, says: ‘Our members are livid that the statutory guarantee and manifesto promises are being disposed of so lightly.
‘It is invidious that the triple lock should be scrapped because of one year of relatively high earning. It might have added perhaps no more than £7 a week to the state pension – so this is hardly a king’s ransom that is at stake.’
Charities such as Age UK have been more understanding about the suspension of the triple lock. It believes it is ‘a price worth paying’ as long as savings go to support social care and it remains only a temporary measure to be brought back for state pension calculations for the year starting April 2023.
The triple-lock promise was introduced by the Conservative and Liberal Democrat Coalition Government in 2010 – when David Cameron and Nick Clegg were keen to make speeches about ‘the big society’ and ‘a fairer, better Britain.’ Even as recently as 2019, the triple lock was set in stone as part of the Tory Election manifesto to ‘unleash Britain’s potential.’
Two years later, a more appropriate slogan might be: ‘Words are cheap.’ A poll released last week by research company Savanta ComRes found 31 per cent of people support the scrapping of the triple lock – while 36 per cent are against it. But the proportion of those that oppose it being axed rises to 63 per cent for those who are aged over 65.
TOP SIPPS FOR DIY PENSION INVESTORS
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