State pension scandal – millions may not get inflation increase

Instead of getting a double-digit pay rise, they may only get half as much. This will hit the poorest and oldest pensioners hadest and must be stopped, a top pensions campaigner has told Express.co.uk.

Under the triple lock, the State Pension rises each year by earnings, inflation or 2.5 percent, whichever is highest.

The Government controversially refused to pass on an 8.3 percent increase in earnings from April this year, claiming the figure had been “skewed and distorted” by the pandemic.

It increased the State Pension by just 3.1 percent instead, causing outrage as inflation subsequently rocketed.

Prime Minister Liz Truss has pledged to restore the triple lock, which means the State Pension should increase by inflation from April 2023. 

However, the triple lock has never applied to Pension Credit, a means-tested State Pension top-up targeted at the poorest pensioners.

They may get a much lower increase as a result.

Pension Credit tops up pensioner incomes to a minimum £182.60 a week if single, or a joint weekly income to £278.70 for couples. Yet this benefit has only increased each year in line with earnings.

This was written into law as a legal minimum.

This means its value has fallen relative to the State Pension, in years when earnings were below inflation or 2.5 percent.

For years, campaigners have been calling for the triple lock to be extended to Pension Credit, yet the government repeatedly rejected their demands.

Instead, it suspended the earnings link when it finally worked in favour of Pension Credit claimants during the Covid pandemic.

This would have given them an inflation-busting increase of 8.3 percent from April, as incomes rebounded quickly after lockdown.

However, the Government controversially suspended the law.

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Instead, it downgraded the Pension Credit increase to 3.1 percent, in line with the reduced State Pension increase.

State Pensions are almost certain to rise by inflation from April 2023, but there is no such guarantee for Pension Credit.

This is a huge blow because next year’s State Pension increase will be based on September’s inflation figure, which could be as high 11 or 12 percent. We will find out for sure when the figure is published on October 18.

Yet if Pension Credit reverts to its earnings link, the poorest pensioners could get a rise of just 5.5 percent.

This figure is based on the average of three months earnings to July.

Former Pensions Minister and political campaigner Baroness Ros Altmann said this is a real danger and would be an absolute scandal. “It leaves pensioner claimants with little protection against today’s rocketing prices.”

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Baroness Altmann is a significant figure because she fought last year’s decision to scrap the earnings-linked Pension Credit increase. “I led a rebellion in the House of Lords which amended the legislation but MPs refused to back it.

“That left the poorest pensioners without the earnings protection they’d previously had before.”

Now she is calling for the Government to do the right thing and increase Pension Credit by inflation from April. “That way it will rise in line with the State Pension, giving everybody a fair deal.”

Yet there is no guarantee this will happen. Because the earnings link was written into law, the Government could fall back on that as an excuse.

Even though Ministers suspended the law when it suited them.

Altmann said: “We hope the Government will not try to shortchange pensioners by using this legal get-out clause.”

Pension Credit may increase in line with inflation, but there is a genuine risk that it will not.

“My hope is that if Express.co.uk highlights the danger, it could deter the Government from taking such a harsh step,” Altmann added.