Triple lock is a time bomb so best make the most of it

RETIREES now know exactly how big their state pension triple lock increase will be next April, but what they still don’t know is how long the mechanism can survive.

- By Harvey Jones

Since 2011, the triple lock has hiked the state pension each year by inflation, earnings or 2.5%, whichever is highest.

With wage growth running at 4.8% between May and July and inflation stuck at 3.8%, the state pension will rise by 4.8% next April.

Someone getting the full new state pension, retirees from April 6, 2016, will get a maximum of £12,548 a year, an increase of £575 on today’s £11,973. Those on the older basic state pension will get £9,615 a year at most. Many will see this boosted by additional state pension, but this will only rise in line with inflation at 3.8%, leaving them trailing.

With inflation expected to fall towards 2% next year, the 4.8% triple lock hike will be a major real-terms boost. Great for pensioners but a headache for Chancellor Rachel Reeves, putting further pressure on the UK's overstretched finances.

RISE

New analysis from Vanguard shows just how valuable the triple lock is.

If the state pension had risen with inflation instead since 2016, it would stand at £11,267 next April, a hefty £1,281 less than pensioners will get.

The value of the triple lock is clear, said James Norton, head of retirement and investments at Vanguard.

“The state pension is key to most people’s retirement plans and covers much of their basic expenditure.”