End of Triple Lock in sight? Why half a million pensioners are not concerned!

In 2011 the coalition government introduced a formula that would ensure that state pensions would henceforth be automatically protected against the vagaries of inflation. They introduced a so-called triple lock which would guarantee that the state pension would be increased every year by the highest of the following:

  • Average earnings
  • Price inflation as measured by the Consumer Price Index
  • 2.5%

Successive governments have honoured this formula (which produced an increase of 3.9% for pensioners in April this year) and the conservative manifesto in 2019 promised it would be maintained for the following five years.

But then came the coronavirus!

This has heaped a heavy financial toll on the UK as with other countries. On July 8 chancellor Rishi Sunak in his summer statement announced a strategy that could cost as much as £30 billion to protect and create jobs. All very commendable. But his statement was very light on detail. At the end of the day someone has to pay the bill.

Rumours are strong that one source of saving could be the scrapping of the triple lock. Why is it such an issue? The problem is that this year could see a dramatic fall in average earnings due to Covid-19 but pensioners would still be guaranteed a minimum uprating of 2.5%, which might be perceived as unfair. But the following year could see a dramatic economic recovery and a rise in average wages of as high as 18%. If this is applied to the state pension the cost to the government could be as high as £40 billion.

Clearly this anomaly had not been thought through back in 2011 or any time since. The government will argue that no-one could reasonably have expected the coronavirus. True, but provision for scenarios such as financial meltdowns, wars, natural disasters should have been built into the original policy. That’s now water under the bridge. The question now is how should we respond to any proposal to scrap or water down the policy? A temporary fix may be the solution.

But half a million pensioners stand to lose nothing at all as they do not benefit from the triple lock!

Nor a double lock or even a single lock! Their pensions are frozen in time. From the time they left the shores of the UK and settled overseas. Over half a million UK pension holders across the world from Canada to Australia and in countries in Asia, Africa and South America have to survive on the pension they received when they left the UK, whether it was last year or over 30 years ago.

While we can sympathise with those whose promised triple lock is threatened, their plight is nothing compared to that of those with frozen pensions.

Any discussion or debate on the triple lock must also address the plight of the frozen pensioners. If savings are to be made by adjusting the triple lock on the basis of fairness to workers hit by Covid-19 then part of the savings should be directed to those who are also suffering from the impact of the pandemic, many of whom are very elderly and suffering extreme hardships. At least a hundred thousand of their number are war veterans. They deserve better.

* Colin Bloodworth is the Head of Policy for the Lib Dems Overseas Executive .

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10 Comments

  • You forgot to mention the reduced number of elderly folk who won’t be alive to benefit from the triple lock because of the impact of Covid 19 on Care homes, Mr Bloodworth, as a result of the incompetence of the Johnson government.Indeed it’s worse than incompetent when you consider a story in the Guardian today.

    “Firm with links to Gove and Cummings given Covid-19 contract without open tender
    Research company owned by associates of senior Tory and PM’s adviser gets £840,000 job”.

    You also forgot to mention that the students of the last ten years…. not over enamoured with the Lib Dems….. will, in the long run, eventually suffer if the triple lock goes. It seems the spirit of 2010-15 still lingers in the Liberal Democrats Overseas Executive (what that is ?).

  • Barry Lofty 13th Jul '20 - 5:47pm

    Yes indeed this governments cavalier treatment of our care home residents sums up the thinking of the likes of Johnson, Cummings and others, self serving is the least of critisisms.

  • David Raw
    UK older people may well consider moving to Thailand where care home costs are lower.
    The young people of today won’t be getting a state pension until they are 68 years old or maybe even older.

  • @Manfarang – you know how to compliment people! 🙂
    The young people of today won’t be getting a state pension until they are 68 years old or maybe even older.
    That’s anyone born after 6th April 1978 ie. 42 and under…

    But you do have a valid point in that I remember the point being raised as to whether it would be more beneficial for the UK to be funding overseas retirement/care homes. I suspect following on from Peter Martins observations on Germany, if the UK were running a travel surplus, it would be a way of rebalancing things – could potentially even call it overseas development aid.

  • The state pension in the UK is poor by comparison to other countries. One of the reasons for the triple lock in the first place was to improve the income of pensioners. ( Full declaration – I am a current pensioner )

  • Clearly the 18% rise cant be allowed to happen, there has to be a temporary fix. The Triple Lock has a limited shelf-life in any case, it was always meant to be a temporary measure to boost Pensions to a reasonable level. The problem could quickly get a lot worse if, as seems likely, we enter a period of Deflation.
    Where you think the reasonable level is probably depends on your life experience. I have always been poor so to me my Pension feels absurdly generous.

  • Peter Hirst 14th Jul '20 - 6:15pm

    All pensioners deserve a decent quality of life. How they achieve this will differ. It is right that those who save are rewarded. Those who haven’t or can’t also deserve an income that allows a no frills high quality of life. The question is what constitutes a no frills high quality of life that we can afford.

  • Ianto Stevens 19th Jul '20 - 4:18am

    An interesting discussion, backed by some real data (unlike many threads on Lib Dem voice). Makes me think that the universal basic income policy is becoming more attractive by the minute. It might be adjusted to take account of cost of living in country of residence.

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