New threat of triple lockdown as state pension hits £209-a-week, but workers get NOTHING | Personal finance | Finance

Critics say the triple lockdown unfairly favors older people at the expense of younger people, and now a top pensions expert is calling for an overhaul. The Conservative government has already suspended the valuable mechanism once and risks the fury of pensioners if it tinkers again.

The Bank of England’s warning on Thursday that inflation could hit 13.3% this autumn is terrifying, but the triple state pension lockdown offers pensioners some protection.

The triple lock, introduced in 2010, pledges to increase the state pension either by inflation or earnings, or by 2.5%, whichever is greater.

It was suspended this year, denying state pensioners a rise of more than 8% as incomes rebounded strongly, as the Department for Work and Pensions said the figures had been ‘biased and distorted’ by the pandemic and leave.

Instead, the state pension has risen by just 3.1%, leaving millions feeling cheated as inflation rages out of control.

Before stepping down as chancellor, Sunak pledged to reinstate the triple lockdown next year, while Tory leadership rival Liz Truss said she would keep it for three years if she was elected Prime Minister.

That could see pensioners get a bumper pay rise from next April as inflation is on course to hit double digits.

The September inflation figure is key, as it is the month used to determine the rise in the triple lock.

A figure of 13% would see the new full state pension rise from £185.15 to £209.22 a week, said Steven Cameron, director of pensions at Aegon.

It would be the biggest increase on record and would take the new state pension to £10,879.41 a year. Yet it would also spark controversy, as state pensioners get valuable protection from soaring prices, while many workers get none.

Incredibly, two-thirds of UK workers have yet to receive a pay rise this year, despite the cost of living crisis, according to new research published by labor and consultancy specialist Resource Solutions.

READ MORE: Triple-lock warning as UK state pension is ‘unfunded’

An exceptional increase in the triple lockdown would trigger accusations of unfairness, Cameron said. “It would also make the state pension more difficult to finance, given that it is the current workers who fund it through their national insurance contributions.”

Cameron suggested that in these unprecedented times it may no longer make sense to base the triple lockdown on one year’s numbers. “This can lead to inequality between people of working age whose incomes can grow at very different rates.”

Cameron suggested instead basing state pension increases on three years of numbers. “It would still protect retirees, but would average out the peaks and troughs, and arguably create a fairer and more predictable outcome for everyone involved.”

The triple lockdown has done a terrific job of helping to reduce pensioner poverty. Yet despite assurances from Truss and Sunak, retirees cannot be sure he will survive.

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He was attacked as overly generous earlier this year as it emerged that three million pensioners live in millionaire households.

Fiona Tait, technical director at Intelligent Pensions, warned she could be at risk due to perceived injustice.

Last year, the Intergenerational Foundation said it should be scrapped because it is unfair to young people.

The state pension will come under greater pressure as retirement ages rise and our aging population puts even more pressure on treasury coffers.

The retirement age is expected to increase to 67 from 2026 and continue to climb thereafter to 68 and beyond.

Victoria Scholar, Head of Investments at Interactive Investor, said: “The only way to ensure a comfortable retirement is to invest for yourself through tax-advantaged pensions and Isas.”

It is more difficult than ever as incomes are reduced, while for today’s retirees it is simply too late. They have to survive on whatever the government gives them and desperately need the triple lockdown to stay.

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