State pension triple lock increases revenue, inflation, highest pension from 2.5%
Data released by ONS on Tuesday shows that average revenues will increase by 7.4% excluding bonuses, but this figure will rise to 8.8% with bonuses.
The rising wage growth is turning to pensions and aiming to impact state pensions triple-lock.
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There is a call to scrap the state’s pension triple lock, bringing the highest pension from revenue, inflation and 2.5%.
This means that pensioners will be set up to receive a significant uplift in their income.
“This raises problems as the Conservatives have committed to maintaining the triple lock of their manifesto. Tom Selby, head of retirement policy at AJ Bell, said:
However, the Pension Act allows the government to estimate revenue growth that it appears to be appropriate.
“Historically, the revenue growth rates used to calculate triple locks are May-July, which could be around 8% if it was published next month. However, The Pension Act allows the government to estimate that it considers revenue growth appropriate, and does not link it to the headline rate published by ONS,” Selby added.
This will allow conservatives to continue their manifesto’s commitment to maintaining triple locks while keeping the state pension costs down.
“Come to the point, ONS is now beginning to publish numbers tracking the growth of the underlying revenues of the economy, stripping them of the skewed effects of the pandemic. The latest data released is the headline revenue. The increase from the previous year at 7.4% (not including bonuses) indicates that the underlying revenues increased between 3.5% and 4.9%, indicating a rather low interest rate.”
“By choosing low values for these numbers, the government was able to reduce the state pension bill by about £3.5 billion compared to using the headline rate (OBR) Estimate a 1% increase, says Selby.
This approach will allow governments to make the most of both worlds when it comes to triple rock. This allows you to maintain your manifesto without putting any additional burden on public finances.
Selby believes that conservatives are committed to maintaining triple rock, but its long-term survival remains questionable.
