Tag Archives: triple lock

…or so some people in this government want you to think

Everyone needs to ensure they get a good pension at the end of the day. So join Lib Dems Overseas Fringe Event: Frozen Pensions to Lost Pensions at the autumn conference 1pm  on Sunday 27 September to update yourselves on the politics of pensions and campaign to safeguard your future!

For decades the UK state pension lagged seriously behind the growth in average earnings. In 2011 the coalition government introduced a formula to protect pensions against the vagaries of inflation. It introduced a mechanism to guaranteeing that the state pension would rise every year by the highest of the following:

–  The rise in average earnings

–  The rise in the Consumer Price Index

–   Or 2.5%

It was called the Triple Lock and was hailed with great fanfare.

But no-one foresaw the coronavirus and the need to spend billions of pounds to shore up the economy and protect jobs.  Where would money to pay for it come from? One soft target identified is – you guessed it – the Triple Lock. The rationale is that earnings and prices this year could fall, yet pensioners would still get the 2.5%. Then, the following year pensions could surge in line with fast-rising earnings.

But those who think that our pensioners are spoilt are probably unaware of the fact that in 2019 the OECD provided data showing that the UK state pension was the worst in the developed world, paying only 29% of average earnings. By comparison, the Netherlands led the table at 100%. Mexico was closest to the UK at 29.6% while the average across the OECD was 62.9%.

What about occupational pensions?