- Conservatives promise to keep pension triple lock, says Hunt
- Triple lock ensures pension rises with inflation, wages, or 2.5%
- Labour yet to confirm triple lock in their manifesto
Jeremy Hunt has stated that if elected, the Conservatives will maintain the triple lock system for determining state pension increases.
The pledge was ratified by the chancellor, thereby ensuring that the pension would increase in accordance with the greater of inflation, 2.5%, or average earnings growth.
He expressed confidence on Sunday with Laura Kuenssberg that the “expensive” promise would be recouped through economic expansion.
“Committed to retaining” the triple lock, Labour stated.
It has yet to be determined whether the pledge will be included in its election manifesto. “We will detail those plans in our manifesto,” Anneliese Dodds, chair of the Labour Party, stated.
In April, the state pension will increase by 8.5%.
Mr Hunt affirmed that the current triple lock system, which determines the annual increase in payments, would “absolutely” continue if the Conservatives were to win the general election for the entire next parliament on January 28, 2025.
Pensioners were more likely to be impoverished than other income categories when we took office in 2010. However, since we implemented the triple lock, their likelihood of falling into poverty has decreased, he explained.
This is a significant social change because, unlike individuals of working age, pensioners are no longer able to work; they have retired, and as such, that must be respected.
Mr. Hunt acknowledged that maintaining the policy would be an “expensive commitment” but added, “That commitment can only be made if you are certain you can generate the economic growth necessary to pay for it.”
Sarah Olney, a spokesman for the Liberal Democrats in the Treasury, described the Conservatives’ pledge as a “shameless election ploy” and claimed that Mr Hunt was “once more taking pensioners for granted.”
According to Yael Selfin, chief economist at KPMG, the assurance of fulfilling this commitment has become more feasible in light of the declining inflation rate.
The year-to-February inflation rate of 3.4% was the lowest since September 2021, and Ms Selfin predicted that it would fall short of the 2% target set by the Bank of England earlier than anticipated this year.
Ms. Selfin stated, “Pension expenditure increases will not necessarily generate substantial growth on their own.” “To stimulate growth, [the chancellor] would have to devise alternative strategies.”
Last week, when queried by The Sun newspaper, Labour leader Sir Keir Starmer declined to say whether the triple lock would be included in his party’s manifesto.
“The current economic climate will determine the course of action leading up to the election.” In response to that inquiry, we shall disclose our complete set of plans in stages; nevertheless, I maintain the conviction in the triple lock.”
The government disburses the state pension every four weeks to individuals who have met the eligibility criteria, attained the appropriate age of majority, and stalled sufficient National Insurance contributions. It is distributed to over 12 million individuals in the United Kingdom.
At this time, the entire new flat-rate state pension (for those who turned state pension age after April 2016) is valued at £203.85 per week, while the full, old basic state pension (for those who turned state pension age before April 2016) is worth £156.20 per week.
The two weekly payments will increase to £221.20 and £169.50 in April, for a total of £11,502 and £8,814 per year.
The anticipated increase in the state pension next month will mark the second substantial escalation in two years, following a 10.1% surge in April 2023.
The triple lock mechanism is precisely engineered to guarantee that pensioners, particularly those who exclusively depend on the state pension, can afford escalating prices or maintain par with the wage growth of the working population.
It was implemented in 2010 under the Conservative-Liberal Democrat coalition government; however, its cost-effectiveness has sparked considerable debate regarding its long-term viability.
The state pension expenditure amounted to £110.5 billion in 2022-2023, which is slightly less than half of the overall government spending on benefits. The Office for Budget Responsibility, the official government forecaster, projected that this figure would increase to £124 billion in 2023-2024.
The director of the economic think tank Institute for Fiscal Studies, Paul Johnson, stated that he was not taken aback by Mr Hunt’s pledge to maintain the policy, as pensioners constitute a significant voting demographic for the Conservative party.
However, he indicated: “It can’t go on forever, and they need to indicate when they want it to stop.”
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In recent years, the rate of price increases in the United Kingdom (inflation) has been exceptionally high, placing financial strain on working families and retirees.
Interest rates remain at a 16-year high despite a significant decline in inflation, as the Bank of England recently increased them in an effort to reduce the rate of increase in consumer prices.
It has significantly increased the cost of obtaining money for households on credit cards and mortgages but has increased returns for savers.
When queried about the resolution of the cost-of-living crisis, Mr Hunt responded that the United Kingdom was “not there yet.” However, he added that a reduction in interest rates would “make the greatest difference for families across the nation.”
Independent of the government, the Bank of England has maintained interest rates at 5.25 per cent for the past five consecutive weeks. However, it signalled last week that reductions are imminent, potentially as early as May of this year.
