What is the pension triple lock?

The triple-lock on state pensions is a guarantee that they will rise in-line with the economy. The triple lock means that state pensions go up every year by 2.5%, inflation (measured by the consumer price index), or the rise in average earnings, whichever is highest of the three. It became effective in 2011 and was introduced by the coalition government under David Cameron. Currently, the full new state pension is £179.60 per week, or £9,339.20 a year. As more people come off furlough and return to full pay, average earnings have risen by 7.4% according to the Office for National Statistics. This would mean the state pension rises to almost £193 per week, and would increase government spending by around £3.5bn. However, due to the costs of the pandemic, the Chancellor has hinted that the lock could be changed to make things “fair, both for pensioners and for taxpayers". One option would consider a two-year rather than a one-year average for the rise in earnings to factor in the fall in incomes during last year’s lockdowns. A second option would leave average earnings out of pension calculations for next year, with just the inflation rate and growth of average earnings considered in a so-called ‘double-lock’. Both options would mean a state pension rise by around 3% instead of 7.4% if the triple lock remains unchanged. An official statement is yet to be made by the Department for Work and Pensions. However, reports say the government will water down the pension ‘triple lock’ guarantee next year.