Is the worst finally over for Britain's pensioners?

LAST year was a financial nightmare for millions of pensioners, as their incomes barely budged while inflation hit double digits. This brought home just how important the state pension triple lock is, and the brutal human cost of Rishi Sunak’s decision to suspend it for one year when he was Chancellor of the Exchequer.

- Harvey Jones

The triple lock increases the state pension each year either by inflation, earnings or 2.5 per cent, whichever is highest. The decision to scrap the earnings element, with the Department for Work and Pensions saying wages had been “skewed and distorted” by the pandemic, gave around 12 million state pensioners a pay rise of just 3.1 per cent in April, instead of more than 8 per cent.

Fury at the move intensified as inflation rocketed to 11.1 per cent in October, leaving millions of elderly people battling to fund the basics of life. Inflation now appears to have peaked, falling to 10.7 per cent in November and 10.5 per cent in December. So will the next 12 months be any better for pensioners? They just might.

TRIPLE LOCK BOOST

While inflation has only fallen slightly so far, analysts reckon by the end of the year it could be in full retreat.

Accountancy group PwC predicted inflation will end the year at 3 per cent to 3.5 per cent, which could give state pensioners a welcome boost.

They will get a pay rise of 10.1 per cent from April, thanks to the triple lock restoration, which if PwC is correct, will be more than three times inflation by year end.

It is too early to bring out the bunting yet. Inflation may prove more stubborn than we think, and the two things pensioners spend most of their money on could prove stickiest of all.