What is the pensions Triple Lock, you may be asking. Well, the pensions Triple Lock was introduced in 2011 to guarantee that the basic state pension will rise by either;
- the rate of inflation,
- average earnings growth,
- or 2.5%
So, whichever is the greater amount out of those three, that’s how much the basic state pensions rises by each year. In recent years this has meant pensions have risen by 2.5%, because inflation and average earnings have risen by less than that. Although this is good news for pensioners, the cost to the taxpayer by including the 2.5% lock has been calculated as £4-6 billion between 2011 and 2016. This may be why the government has proposed replacing the Triple Lock with a Double Lock in 2020, which would only lock pensions to inflation or earnings, not the (more expensive) 2.5% lock.
To give some extra background, this same policy was included in the manifesto of the previous government (also the Conservative Party) led by David Cameron, whose term would have lasted until 2020 if there hadn’t been a snap election in 2017. So basically they were saying they would maintain the Triple Lock for their whole term of office. Now the new government is in place, with their term of office now running until 2022, they have only promised to protect the pensions Triple Lock to 2020 as per the previous government’s pledge, which is only for three of their five potential years in office (why five years?).
But back to the point. The Triple Lock is in effect, it has been for several years, and there are no plans to change it before 2020. In fact, it’s worth adding that as things stand currently, the Triple Lock is going to be protected beyond 2020 too. This is due to an agreement that the Conservative Party made with the Democratic Unionist Party (DUP) just after the election. One of the conditions of the agreement was that there would be “no change to the Pensions Triple Lock…”. So this means that the Triple Lock would remain protected for at least as long as this government’s term of office, which is up to 2022. It also means the government won’t be fulfilling their promise to introduce a new Double Lock for pensions in 2020.
Our verdict therefore is that this policy is ‘done’. In other words, the government doesn’t need to introduce any new policies or take any further action to keep the Triple Lock. However, if some time before 2020 the government scraps the pensions Triple Lock for the Double Lock (or any lower level of protection to pension rates) we would then mark this promise as ‘broken’. Follow this policy for updates when they happen.
Get the detail!
- Conservatives agree pact with DUP to support May government – BBC
- Agreement between the Conservative and Unionist Party and the Democratic Unionist Party on support for the government in parliament – Gov.uk
- Would you rather? Further increases in the state pension age v abandoning the triple lock – Institute for Fiscal Studies