New Prime Minister Andy Burnham will give younger state pensioners at least £12,861 from next April thanks to the triple lock, for those with a full National Insurance record. The new leader of the Labour Party and of the country, along with his new Chancellor John Healey, has already pledged his commitment to the somewhat controversial triple lock policy in his time as PM.
Triple Lock Mechanism
The triple lock enshrines that the state pension is guaranteed to increase every year based on one of three metrics - inflation, wage growth or a flat 2.5%.
In the lead up to his being named as the new Labour party leader, Mr Burnham confirmed he will keep the increasingly divisive triple lock pension mechanism in place, despite reports from the OBR that it is putting the UK on an 'unsustainable path' due to the cost.
Commitment to Manifesto
Earlier this month, Andy Burnham said it is “important” to continue the Labour manifesto commitment to maintain the triple lock on the state pension. Reddit user Masam10 asked in an online Q and A: “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.”
Current and Future Pension Values
Currently, the basic state pension, for those who hit state pension age before 2016, is worth £9,614.80. It means that even if the triple lock only rises by the statutory minimum 2.5%, it will hand older state pensioners an extra £240.37 per year on their basic state pension payments, if they have a full National Insurance record, not including any additional uplifts such as Second State Pension.
For those who hit state pension age after April 2016, so 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 floor 2.5% rise on this would be worth £313.69 for these 'new state pensioners' who have a full National Insurance record, taking their payments to £12,861.29 for the year.
Crucially, these are the minimum increases for a pensioner with a full National Insurance record. In both cases, the final confirmed increase figure is likely to be even higher, as wage growth and inflation are both tracking above 2.5%. This year, for example, new state pensioners were handed a £575 boost starting in April thanks to a 4.8% wage growth figure.
