Looks at the triple lock used to uprate the State Pension and the arguments for and againstJump to full report >>
The State Pension for people who reached State Pension age (SPA) before 6 April 2016 has two tiers:
A new State Pension (nSP) was introduced for future pensioners from 6 April 2016.
For the bSP and nSP, there is a statutory requirement to uprate at least in line with earnings. The triple lock is a government commitment, over and above this, to uprate by the highest of earnings, prices or 2.5%.
Different uprating arrangements apply to the other parts of the State Pension – such as the additional State Pension and the additional amounts earned by deferring a claim to the State Pension.
The introduction of the triple lock was announced by the Coalition Government in its first Budget after the 2010 election:
1. 107 In the last Parliament, the basic State Pension was uprated by the higher of prices or 2.5 per cent. This Government will uprate the basic State Pension by a triple guarantee of earnings, prices or 2.5 per cent, whichever is highest, from April 2011. CPI will be used as the measure of prices in the triple guarantee, as for other benefits and tax credits. However, to ensure the value of a basic State Pension is at least as generous as under the previous uprating rules, the Government will increase the basic State Pension in April 2011 by at least the equivalent of RPI. (HM Treasury, Budget 2010, June 2010).
The Conservative Government continued the policy after the 2015 election. In the 2016 Autumn Statement, Chancellor of the Exchequer Philip Hammond said the Government would “review public spending priorities and other commitments for the next Parliament in light of the evolving fiscal position at the next spending review” (HC Deb 23 November 2016 c906). However, the 26 June 2017 agreement between the Conservative and Democratic Unionist Parties said both parties had agreed that there would be “no change to Pensions Triple Lock.”
Arguments for and against the policy centre around questions of cost and intergenerational fairness.
Commons Briefing papers CBP-7812
Authors: Djuna Thurley; Richard Keen