Should the triple lock give an 8% state pension rise?

Jul 10, 2021, 12:31 PM

The triple lock has always been a hot potato but things have stepped up another gear as it could deliver a bumper 8 per cent state pension increase due to a statistical quirk.

The state pension pledge means that payouts rise by the greatest of inflation, wage growth or 2.5 per cent.

Yet, wage growth numbers are being skewed this year because the Covid crash a year ago saw millions put on furlough on a maximum of 80 per cent of earnings, workers suffer temporary pay cuts, and many lose their jobs.

Job cuts disproportionately hit the low paid and continue to do so, taking them out of the figures and bumping up the average wage, workers coming back from furlough are seeing pay go back up to their full amount, and short-term pay cuts have been reversed.

All this makes average wage growth look artificially high, despite many public and private sector workers suffering pay freezes or negligible rises.

The Office for Budget Responsibility forecast that distortion could lead to an 8 per cent wage growth figure in the month the triple lock reading is taken from, delivering a £14 weekly increase to the state pension and £3billion bill.

Is it fair for pensioners to get a bumper increase based on a distortion caused by the pay pain suffered by workers in lockdown? Some say ‘no’, others say ‘stick to the deal’.

On this week’s podcast, Tanya Jefferies, Georgie Frost and Simon Lambert look at what is causing the triple lock anomaly and what the Government might do. Will they pay up or fudge it?

Also this week, the painful cases of those who cannot afford funerals for loved ones, the return of gazumping to the property market, and finally, the crazy NatWest banking rule that has forced a reader to have their employer’s bank accounts mixed with theirs in online banking.