Products You May Like
Boris Johnson has vowed to re-introduce the state pension triple lock after suspending its implementation last year. A return to the old formula means pensioners will see their payments rise by more than 10 percent in 2023.
The triple lock guarantees an increase by the highest figure out of average earnings, inflation or 2.5 percent.
The full state pension is currently £9,628 per year meaning pensioners can expect a boost of almost £1,000 as September’s inflation rate is due to hit 10 percent.
The triple lock scheme was introduced by the coalition Government in 2010 to allow pensioners’ income to keep in line with workers’ earnings.
However, the Bank of England and economists have warned that pension increases that are in line with inflation risk fuelling further price rises.
Downing Street has defended the decision to restore the triple lock despite the Government arguing against wages keeping up with a rising cost of living.
Mr Johnson told the Cabinet this morning: “It is right that we reward our hard-working public sector workers with a pay rise, but this needs to be proportionate and balanced.
“Sustained higher levels of inflation would have a far bigger impact on people’s pay packets in the long run, destroying savings and extending the difficulties we’re facing for longer.”
Deputy prime minister Dominic Raab told BBC Radio 4’s Today programme on Wednesday, June 22: “They [pensioners] are particularly vulnerable and they are disproportionately affected by the increase in energy costs which we know everyone is facing.”
He said that the Government had committed £37billion to help people cope with rising costs and added: “at the same time we have got to stop making the problem worse by fuelling pay demands that will only see inflation stay higher for longer and that only hurts the poorest the worst”.
Rishi Sunak urged to extend £650 cost of living payment as PIP recipients miss out [LATEST]
Pension warning as you could wipe 11 years of income off your savings as inflation rises [WARNING]
Cost-of-living crisis pushing disabled into debt, research shows [ANALYSIS]
Public sector workers, including striking rail staff, are being told to accept the “sacrifice” of pay settlements that fall short of the cost of living prices to avoid a spike in wages resulting in further pressure on prices.
Asked why state pensions will rise in line with inflation but public sector pay would not, the Prime Minister’s official spokesman said: “It’s always about striking the right balance when it comes to making sure that we reward our public sector workers fairly whilst also not doing anything that is irresponsible with the public finances more broadly.
“The Chancellor needs to consider this all in the round and I think the view is that we can meet that commitment without stoking inflationary pressures, but you know, we did take difficult decisions with regards to the triple lock with a temporary one year suspension.”
The triple lock was suspended for 2022 with Pensions Secretary Theresa Coffey declaring last September that the move would avoid large increases caused by a “statistical anomaly”.
Several Conservative MPs were frustrated by this decision as to the Party’s pledge to maintain the triple lock in its 2019 election manifesto.
So what do YOU think? Is it fair for state pension to increase 10 percent next year? Vote in our poll and leave your thoughts in the comment section below.