Explainer-in-brief: Behind the pensions triple-lock promise
The pensions triple-lock was introduced in 2010, to ensure payments rise each year keeping up with the cost of living. It works in a simple way: state pensions rise in line with whichever is the highest between average earnings growth, inflation or a flat 2.5 per cent rise.
Last year the government suspended it, mainly because of the furlough scheme. Under the Treasury’s scheme, employers paid their workers only a reduced wage. When the scheme ended, they went back to paying them full wage. This created an artificial boost in the average UK wage of 7.3 per cent.
Under the triple-lock, that would have meant an equal pension rise that the government couldn’t sustain after providing financial support throughout the pandemic.
The government has now confirmed the triple-lock will be reinstated, and as inflation is set to rise to 11 per cent in autumn, pensions will follow. Wages, for the moment, will not.