Financial experts warn that seniors should not hold on to their hopes that the triple lock for the state pension will be saved following a House of Lords rebellion. 

The Lords approved a 220 vote to 178 amendment requesting that the Government reconsider plans to suspend the valuable guarantee for a year and adjust it to address pandemic distortions.

However, this is likely to be overturned by MPs when the legislation returns to the House of Commons. 

The triple lock means that the state pension will increase by the highest amount of price inflation, average earnings rise, or 2.5%. Many elderly people were upset by the decision to abandon it, even if temporarily.

Triple lock: Many pensioners are angry it has been ditched for one year

Triple lock: Many pensioners were angry that it was scrapped for one-year

In comparison to this year, wage increases were artificially boosted when there was a Covid-19 crisis.

However, 93% of respondents to a This is Money poll (voted on by 22,000 readers) wanted the Government to honor its promise and provide more funding.

Ros Altmann (a pensioner campaigner) led the revolt in Lords. She stated that the amended bill would honour both the Triple Lock Promise and the Conservative manifesto commitment.

She said that the government is able adjust earnings data to account the pandemic effects.

“We are already in a crisis of cost of living and official forecasts predict that inflation will rise to 4% next year.

What impact will it have on the triple lock being removed for a year? 

8.3 percent was the key earnings growth figure that would ordinarily have determined the state pension increase starting next April.

Instead, the Government used the 3.1 percent CPI inflation rate for September.

A 8.3 percent increase would have been equivalent to an increase in the basic rate £149.00 or around £7,750, and in the full flat rate to £194.50 and around £10,110 a year.

But the basic state pension will now rise by £4.25 to £141.85 per week, or around £7,370 a year. And the full flat rate will rise by £5.55 to £185.15 per week, or around £9,630 a year. 

The basic rate would rise to 4% if the 4 percent inflation rate forecasted for next year were used. £143.10 a week or £7,440 a year, and the flat rate to £186.80 or £9,710.


Lady Altmann said, “It’s a matter both of principle and trust. Pensioners are not a piggybank that Chancellors can raid when money is tight.

“They are not a cash machine that can be taken from by the Treasury to make money for other priorities. Pensioners deserve better.’

Pension experts warn that the Government will likely win a vote to retain its one-year suspension when it returns to the House of Commons. Below is a summary of their views.

The government is unlikely not to move

‘Scrapping the state pension triple lock – a Conservative manifesto commitment – for one year was always going to be controversial, with pensioners set to miss out on a post-lockdown 8.3 per cent boost in their retirement incomes,’ says Tom Selby, head of retirement policy at AJ Bell.

“While a 3.1 percent inflation increase is better than nothing,” says the WSJ. With prices expected to rise by 4% over the next twelve months, this will likely feel like a cut to real terms for millions retirees.

‘However, the Government has already banked over £5billion a year in annual savings from the move and so is highly unlikely to budge from its position.

‘If the triple lock were to be retained, the revised earnings measure would likely need to save the Exchequer almost exactly the same amount of money as scrapping the triple lock – meaning the net impact on those in receipt of the state pension would in any event be relatively small.’

Lords rejection is only a fleeting glimpse of hope

“In real terms, pensioners might be left out of pocket” if the suspension is passed. However, inflation during 2022 will be reflected by the uprating mechanism 2023,’ Jon Greer, head, retirement policy at Quilter.

“But that may be held by few pensioners in the immediate future.

‘While a defeat for the government is embarrassing, the Bill will return the Commons where the amendment will be voted down because they have privilege on financial issues.

“The debate around the triple lock further illustrates the need for us to separate the arguments over the level and method of increasing the state pension in order to ensure it is done in a fair and sustainable manner.

‘The Lords rejection likely gave pensioners a fleeting glimmer of hope, but they shouldn’t hold their breath.’

A rise of 8.3% is unrealistic but 3.1% seems harsh

Steven Cameron, Aegon’s Pensions Director, states: “Most would agree that maintaining a triple lock on the state pension would fail the test to determine intergenerational fairness. It would allow pensioners an unrealistic rise of more than 8 percent resulting from distortions of earnings growth figures during the pandemic.


How much should the state pension go up by next year

  • 3.1% – as backed the Government 0 votes
  • 4.0% – Most likely inflation next year 0 votes
  • 8.3% – Earnings figure 0 votes
  • Other – pandemics are taken into consideration 0 votes

‘But during a period of economic volatility and inflation expected to average 4 per cent over the coming year, it’s becoming increasingly clear that the government may have been too hasty to pull the trigger on the triple lock entirely.

‘With the earnings distortions evident over the spring and early summer, we alongside many pensions experts offered suggestions for a fairer approach, allowing the government to keep its manifesto commitment of maintaining the spirit of the triple lock while ensuring pensioners aren’t left out in the cold.

These include smoothing out earnings growth over a period of two or three years or basing the increase in earnings on an earnings figure calculated by official statisticians with any pandemic distortions removed.

‘While 8.3 per cent continues to look extremely generous, 3.1 per cent is now looking harsh against the broad acceptance we’ll see sharp winter rises in the cost of living as well as in heating costs which disproportionately affect pensioners.’

“The vote on the triple lock will now return to the government, where MPs might be persuaded to reconsider a fairer middle ground.

Pensioners might be unable to cover essential bills

Becky O’Connor, head of pensions and savings at Interactive Investor, says: ‘Millions of people who depend on the state pension have been offered a faint glimmer of hope this week that their income will continue to adequately cover rising living costs.

“The House of Lords supported an amendment to use an alternate earnings figure instead of removing the earnings element of triple lock guarantee.

‘But the result of the vote will depend on whether it is backed by the House of Commons and if the Government can agree on a fair level for next year’s rise, given that the inflation and earnings data that usually form part of the triple lock have been so distorted by the pandemic.

‘Inflation is likely to run higher in the coming months than the 3.1 per cent recorded in September, which under the Government’s plan to suspend the triple lock for a year, announced in September, is set to determine next April’s rise in the state pension.

“As a consequence of rising inflation the fear is that pensioners might still be in unable to cover their essential expenditures, such food bills, energy bills, and so on.

O’Connor stated that the earnings figure was considered an unfairly large rise for pensioners. However the Government has promised to reinstate it after one year. The Lords vote would likely aid that cause.

‘There is always a risk it would not revert back as promised, particularly as doing so could result in a further cost to the Government’s benefits bill. This amendment could eliminate some of that risk.


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