Triple lock restored but half a million miss out

Work and Pensions Secretary Therese Coffey has confirmed that the government will remain committed to the state pension triple lock for the rest of this parliament, following the temporary move to a ‘double lock’ in 2022 because of pandemic distortions. 

This means that in April 2023 British state pensioners will once again receive an uplift at the highest of the rise in earnings, price inflation or 2.5%. Due to the huge increase in the cost of living this year, and depending on what this amounts to by September, the increase in April 2023 could be 8% or higher.

It may appear generous but pensioners will still have to cope with inflationary pressures for a whole year while waiting for the increase to take effect. And let’s not forget that the increase they are receiving this year will be less than originally promised by the government in their election manifesto. 

Even with the Triple Lock, the fact is that the British state pension is one of the lowest relative to average earnings among the developed countries constituting the OECD.

There is another fallacy that is overlooked even by the unions. Namely the concept of cost of living increases calculated in terms of percentages. For a low earner or pensioner with an annual income of £10,000 an increase of 8% would amount to £800 whereas a person with an income of £100,000 would receive an increase of £8,000! The tax brackets may reduce the disparity a little but it should be obvious that the system simply results in an ever-widening gap in monetary terms between the rich and the poor.

But let’s turn our attention now to the plight of half a million British state pensioners living overseas, but not in designated countries, for whom the Triple Lock has no meaning since they will receive NO INCREASE this or next year. Just as in past or future years unless a gross injustice going back 70 years is seriously addressed. Wherever they live, they are also being severely impacted by inflation.

The plight of a good proportion of them living in Australia or Canada is recognised by their host countries who offer support to compensate for the failure of successive British governments to tackle the issue. This should embarrass a government that shamelessly allows foreign governments to do its job for them. 

However, frozen pensioners living in most other countries throughout Asia, Africa and the Americas are left to struggle on their own with no financial support or access to free health and social services. The cost of rectifying their situation would be a fraction of the money recently spent on pandemic relief or the money now being allocated to supporting Ukraine and refugees in general. The latter are all good causes but let’s not forget that most of the British living overseas paid their NI contributions in full.

Many if not most of these ‘frozen’ pensioners have been overseas for over 15 years. By the time of the next general election they should have the right once again to vote. This is a huge opportunity for Lib Dems to capture new voters if we can adopt policies that address the plight of frozen pensioners and the many other issues such as access to the NHS that affect British citizens who reside overseas.

The party that stands up for the rights of these citizens stands to win hundreds of thousands of new votes that will be allocated to their original constituencies around the country.

 

* Colin Bloodworth is a member of the Lib Dems Overseas Executive .

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6 Comments

  • Brad Barrows 5th Apr '22 - 1:30pm

    It is a basic misunderstanding of inflation to complain that an equal percentage increase in the income of both higher and lower incomes causes an increased gap in monetary terms – that argument fails to understand that the value of that gap is exactly the same as the value of the money used to measure the gap has been eroded by the inflation. Therefore unions are correct to argue that increasing the incomes of both higher and lower income earners by the current rate of inflation returns relative incomes to the situation that existed prior to the effects of inflation. That said, if the causes of the inflation are driven by certain commodity prices etc that more affect certain income groups due to differing spending patterns, then differentiated income increases may be necessary to compensate the more affected income ranges.

  • Energy prices alone are likely to rise something like £600-£1,000 this year. So even if the triple lock had applied, £800 a year wouldn’t have gone very far. And of course, it didn’t (apply).

  • Cassie 5th Apr ’22 – 4:15pm:
    Energy prices alone are likely to rise something like £600-£1,000 this year.

    Or they might not…

    ‘China’s coal revival may soon slash our energy bills, but at a wicked cost’ [March 2022]:
    https://www.telegraph.co.uk/business/2022/03/25/chinas-coal-revival-may-soon-slash-energy-bills-wicked-ecological/

    Surging coal use in China will displace imports of liquefied natural gas (LNG) used in power plants, freeing up hydrocarbons for the rest of the world.

    China became the world’s biggest importer of seaborne gas last year: a key reason why gas prices were spiralling upwards even before the Kremlin began to manipulate supply. What it now does determines our fate in Europe.

    Citigroup is telling clients that global gas prices could fall as fast as they rose, plummeting over the second half of this year as diverted LNG floods the world market.

  • James Fowler 7th Apr '22 - 10:29pm

    Am I seriously reading another post calling for an even bigger slice of national wealth to be devoted to pensioners? Back in 2015, the median net household income for pensioners surpassed that of 24-29 year olds for the first time ever. Stop and ponder that for a moment. When we consider what do with what we tax from the working population, should we use it to boost the incomes of relatively wealthy people who have chosen to no longer live or work in UK, or perhaps it might be better spent assisting poorer citizens who are still living and working here?

    It speaks volumes that at this time of falling living standards there is a steady drum beat on Lib Dem Voice calling for protecting the already well entrenched privileges of the the elderly, and few posts by commentators about unemployment, disabled or illness allowances; nor for that matter about the past 15 years of stagnant wages. Let’s not even get started on the gross disparity in accumulated pension and housing wealth.

    In the (very) long list of people who have been penalized and impoverished over the past 15 years, overseas pensioners probably do fit in somewhere… near the bottom.

  • Mick Taylor 7th Apr '22 - 11:18pm

    @jamesfowler. You seem to forget that the UK state pension is one of the lowest in Europe and much of the developed world.
    I am fortunate in having a works pension that I paid for (in conjunction with my employer) all my working life. If I had to actually live on my state pension of £159.52 a week, I would struggle. My rent alone is £625 a month, although I might qualify for help with rent and council tax if the state pension was my only income.
    The UK is a wealthy country, where the rich are in charge under this government and seek to persuade the rest of us that we can’t afford better, when in fact, all they want to do is keep their wealth and pay minimum tax and to hell with the rest of us.

  • Nonconformistradical 8th Apr '22 - 12:59am

    I note James Fowler uses the word ‘median’ in reference to pensioners’ income. I presume he understands it’s meaning in this context i.e. the amount of income at which half of pensioners fall below and half above.

    A pity he does not also use another important statistics word ‘range’ to describe the highest and lowest incomes of pensioners – many of whom have no income other than the state pension while others, as Mick Taylor points out, may be fortunate in having employment-related pensions in addition to state pensions.

    As someone falling into the same category as Mick – my company pension means I’m comfortably off. I’m not complaining. I think there is a good case for merging national insurance contributions into income tax – which would mean this comfortably off pensioner would pay more tax than she does at present. I’m appalled at Sunak’s loading of the cost of his dedicated funding for health and social care on to working people – there is no good reason why better-off pensioners should not be contributing as well.

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