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Pensioners to lose £11,000 if triple lock policy is scrapped

Pensioners

If those turning 66 this year lived to be 85 they would miss out on a total of £11,866 compared to if pensions just increased at 2.5 per cent each year, according to The Express

The State Pension is set to rise massively next year but Chancellor Rishi Sunak could stop that from happening.

Pension increases are linked to rises in earnings and prices under the triple-lock policy, guaranteeing pensions do not reduce in value. The policy requires the pensions do not reduce with falling earnings but do go up at the same rate when they rise again.

The Express reported that the State Pension is on track to grow at the fastest rate in more than a decade as a result, rising £882 in 2022. But the Chancellor is reportedly not keen to provide such a significant boost.

Earnings data published by the Office for National Statistics today showed growth was at 8.8 per cent due to the economy bouncing back after months of mass redundancies, wage cuts and furlough which caused a steep fall in average earnings due to the coronavirus pandemic.

Mr Sunak wants to use underlying earnings data, which strips away the abnormal effects of the pandemic which would mean an increase of less than five per cent and would increase the annual State Pension payment by £327 – saving the taxpayer £3.5billion.

The Express calculated that if those turning 66 this year lived to be 85 they would miss out on a total of £11,866 compared to if pensions just increased at 2.5 per cent each year.

Whatever the decision made by the Chancellor, the smoothing over is likely to be a highly contentious issue in the months to come.

Not only will scrapping the triple lock break a Tory 2019 manifesto pledge, it is also likely to hurt some of the most vulnerable members of society, as well as push hard on the Government’s plans to recover economically from the coronavirus crisis.

Andrew Tully, of Canada Life, a pension provider, supported a move to strip out the artificial earnings growth, claiming it would be the best compromise for the Government.

He said: The State Pension would increase by a material amount, hopefully seen as fair in these exceptional circumstances, and making sure manifesto pledges are met.

Important:

This article is for information purposes only.

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.