New Prime Minister Andy Burnham has pledged to maintain the state pension triple lock, a move that could see new state pensioners receive up to £1,071.75 per month from next year. The commitment comes despite growing concerns about how the policy will be funded in the future.
Mr Burnham and his new Chancellor John Healey inherit a system that already pays up to £1,045.63 a month to retirees who reached state pension age after April 6, 2016. The full new state pension currently stands at £241.30 per week, although payments are made every four weeks rather than monthly. Averaged across a year, this works out at £1,045.63 per month for those with a full National Insurance record.
Triple lock increase
Thanks to the triple lock, state pensions have risen by more than inflation, with increases linked to wage growth. The policy requires pensions to rise by whichever is highest of wage growth, inflation, or a flat 2.5%. This year, wage growth was the highest at 4.8%, leading to an April increase in line with that figure.
The old basic state pension, for those who retired before 2016, rose by the same percentage, going from £176.45 per week to £184.90 per week.
Minimum 2.5% rise next year
With Mr Burnham promising to maintain the triple lock in the upcoming Budget, state pensioners are set to receive at least another 2.5% increase to their Department for Work and Pensions payments next year. Earlier this month, Mr Burnham said it is “important” to continue the Labour manifesto commitment to maintain the triple lock.
During an online Q&A, Reddit user Masam10 asked: “Is it time to abolish the triple lock? Or at least have that discussion?” The Makerfield MP replied: “I appreciate there’s a lot of debate about this but it is important that the commitment in the manifesto stands.”
Impact on pensioners
Currently, the basic state pension for those who reached state pension age before 2016 is worth £9,614.80 per year. Even if the triple lock only rises by the statutory minimum of 2.5%, it would give older pensioners an extra £240.37 per year on their basic state pension payments, assuming a full National Insurance record and not including additional uplifts such as Second State Pension.
For those who reached state pension age after April 2016, and would be aged 77 or under by next April due to the state pension age of 63 to 65 in 2016, the state pension is currently worth £12,547.60 per year. A minimum 2.5% rise would add £313.69 for these new state pensioners with a full National Insurance record, taking their annual payments to £12,861.29. Averaged across a year, this means monthly payments of £1,071.75, though the final figure could be higher if one of the other triple lock elements exceeds 2.5%.
