Triple Lock: Adjustment of State Pensions Provokes Mixed Reactions

The 'Triple Lock' policy ensures that the state pension increases each year by the rate of inflation, wage growth, or at least 2.5%, whichever is highest. The full 'new' state pension will rise in line with wage growth of 4% in April 2025, increasing by £460 to £11,962 annually. This will benefit around 3 million retirees who began receiving their pension since April 2016. Approximately 8.5 million individuals who retired before this date receive the 'old' state pension, which will also increase by 4% or £354 to £9,167 annually. However, 7.2 million of these older pensioners also receive an additional, earnings-related pension, known as Serps, which only increases in line with inflation. With the current inflation rate at 2.2% in September, this part of the pension is expected to rise by only about half of the increase rate, meaning older pensioners could lose hundreds of pounds compared to their younger counterparts. Many of these older pensioners also lose more on winter heating payments. Eligible pensioners aged 80 and over currently receive £300 for their energy costs, while younger pensioners under 80 only receive £200. Steve Webb, a former pensions minister at the pensions advisory firm LCP, commented: "The headline figure of a 4 percent pension increase will not be a reality for the majority of pensioners in the old pension system." Rachel Reeves, the Chancellor, emphasized that under the Labour government, pensioners will be £1,700 better off. However, experts warn that many pensioners will not feel the impact of the Triple Lock increase and could be worse off next year. According to Mr. Webb, inflation will eat up about £250 of the £460 increase, leaving pensioners with a real increase of only £210. Reeves' decision to grant winter allowances based on need will remove payments of up to £300 annually from around 10 million pensioners. Approximately 20% of pensioners have no other income apart from the state pension. Only about half of the 3.4 million pensioners receiving the new state pension receive the full amount, while 150,000 receive less than £100 per week. Many employees who had invested in 'outsourced' company pension schemes could also receive less than the full 'basic' amount, according to Mr. Webb. Becky O'Connor from PensionBee said: "Increases in the state pension are often used to highlight the discrepancy between pensioner benefits and those of working individuals. Yet, it is important to recognize that many pensioners do not receive the full amount and therefore will not benefit from the announced annual increase of £460. It is also crucial to note that many pensioners are entirely dependent on the state pension, have no other income source, and can no longer work. Cuts to winter fuel allowances are likely to hit some of the poorest pensioners, who receive lower state pensions. This group of pensioners needs all the support they can get." The Department for Work and Pensions has been asked for a statement.