The triple lock guarantees the state pension rise in line with whichever is highest of 2.5 percent, wages and inflation. New Prime Minister Rishi Sunak has been asked if he would commit to the policy, which was suspended last year.
The Prime Minister’s press secretary said: “That is something that is going to be wrapped up into the fiscal statement, we wouldn’t comment ahead of any fiscal statements or budgets.
“But what I can say is he has shown through his record as chancellor is that he will do what’s right and compassionate for the most vulnerable.”
His predecessor, Liz Truss, said she was committed to the policy but her recent departure has thrown the issue up into the air again.
Around 12.5 million people who receive the state pension could face a real-terms cut in earnings if their payments do not rise in line with soaring inflation, which is currently at around 10 percent and is expected to keep rising.
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“While Sunak’s predecessor, Liz Truss, committed to the triple lock in what turned out to be her final Prime Minister’s Questions, the Chancellor, Jeremy Hunt, had pointedly refused to do so before her intervention.
“Given the current focus on fiscal conservatism, it is hard to be absolutely confident whether or not Truss’ triple lock commitment will be retained by Sunak.”
If the inflation element of the triple lock is abandoned and average earnings growth is used instead, the full new state pension would rise to £195.35, which is £442 over the course of a year less than the triple lock amount.
Ms Suter said: “Over the longer-term, the Government needs to review the triple lock and decide exactly what it is trying to achieve.
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“Currently it provides real-terms increases in the value of the state pension at random intervals, and it has become clear that there is a limit to the amount the Exchequer is willing to shell out on pensioner incomes.
“If the Government really wants to increase the state pension, it should set out its case and a trajectory for reaching that goal.”
The Government is to set out its financial plan at the next Budget, which has been pushed back from Halloween to November 17.
A medium-term fiscal plan will be published as an autumn statement, alongside a new set of economic forecasts from the Office for Budget Responsibility.
Chancellor Jeremy Hunt said this morning: “I want to confirm that it will demonstrate debt falling over the medium term which is really important for people to understand.
“But it’s also extremely important that that statement is based on the most accurate possible economic forecasts and forecasts of public finances.
“And for that reason the Prime Minister and I have decided it is prudent to make that statement on November 17 when it will be upgraded to a full autumn statement.”
Ms Suter said Mr Sunak may be thinking about plans to increase benefits as he considers what to do with the triple lock.
She said: “In terms of costs to the Exchequer, the difference between an earnings link and an inflation link is likely to be £4 to 5 billion.
“But part of the political challenge here is in relation to benefits too – if the state pension increases in line with inflation, can the new prime minister justify ‘only’ increasing benefits in line with earnings? If he does, complaints around intergenerational unfairness will inevitably intensify.”
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