The state pension is set to increase by up to £460 a year from April 2024, providing another annual boost for pensioners.
While the increase is not "100% confirmed", recently released data offers "a pretty good idea of what will happen", meaning pensioners can expect extra money in their pockets in a few months' time, said The Guardian.
In April 2024, the state pension increased by 8.5% to £221.20 a week for the new state pension and £169.50 a week for the old basic state pension – the latter intended for those who reached retirement age before 2016.
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The latest decision to provide pensioners with a financial boost "could help take some of the heat off ministers", the newspaper added, following a "widely criticised decision" to axe winter fuel payments for older people, except for the poorest in England and Wales.
What is the triple lock?
The triple lock is a policy introduced in 2010 by the coalition government. It was designed to help protect pensioners' incomes by increasing the state pension in line with average wages, inflation, or by 2.5%, whichever is higher.
The wage data is based on pay growth figures for May to July, released in September by the Office for National Statistics. These showed that total pay "rose at an annual rate of 4%", said the BBC, and given this is "much higher than inflation", the figure is likely to be used for the triple lock this year.
The Institute for Fiscal Studies (IFS) has warned the triple lock is "increasing public finance pressures" and risks the sustainability of the state pension system, creating "heightened uncertainty" for people retiring in the future.
Why is the triple lock so controversial?
There are "issues and challenges" around funding the triple lock, explained Unbiased.
Department for Work and Pensions spending on the triple lock has increased from £69.8 billion when it launched in 2010 to £104.9 billion in 2021/2022, making it a "politically emotive" subject that, considering the ageing population and falling birth rate, won't go away any time soon.
The IFS said the triple lock has added £11 billion to spending on the state pension in 2023/2024 and will cost an extra £2 billion in 2024/2025.
Economists often criticise the triple lock as being "too expensive to maintain", said The Times Money Mentor, with about 60% of welfare spending going towards pensioners. Critics also suggest there is "intergenerational unfairness". Should younger people "subsidise the income of older people at a time when they may be struggling with their own living costs"?
By how much is the state pension rising?
In April this year, pensioners received a "bumper 8.5% pay rise, the second largest ever", said The Telegraph.
It means payments have increased to £221.20 per week or £11,502 per year, for people on the new full state pension. Those on the basic state pension are receiving £8,814 a year.
While pensioners and those approaching retirement may be looking forward to the increase, due to frozen tax thresholds, pensioners are "facing a 'retirement tax' on their state pension income within two years", the newspaper added. The Labour government has "vowed" to keep the tax threshold frozen at £12,570 until 2028, similar to the previous Conservative policy, and so pensioners on the full sum will need only a little extra income to put them in the tax net.
What is the alternative to the triple lock?
The triple lock is staying in place "for now", said The Times Money Mentor, particularly as Labour has promised to keep the policy. However, the government could suspend the policy if necessary.
In 2022/23, the Conservative government temporarily removed earnings from the equation due to a "post-lockdown spike in wages", explained NerdWallet, and increased the state pension by the inflation measure of 3.1% that year.
Former pensions minister Baroness Ros Altmann has called for a "double lock", which would guarantee an increase of either inflation or average wages.
A more "pessimistic scenario", added Unbiased, would be for the state pension to have only a single lock, linked either to wages or inflation, but this may mean pensioners' spending power is reduced over the medium to long term.
The worst-case scenario would be returning to when changes to the state pension were "made at the whim of the chancellor", the financial website added.
The Organisation for Economic Co-operation and Development has proposed indexing pensions to an average of inflation and wage growth, while "providing direct transfers to poor pensioners to mitigate poverty risks".
Another "solution" would be to "make people work longer", said The Telegraph's Mattie Brignal, by raising the state pension age, which is currently at 66 for both men and women, and gradually rising.
An increase to the state pension age has previously served as a "silver bullet" in order to "keep the state pension system ticking along", but is "deeply unpopular", especially with a "recent dip in life expectancy".
While neither party has plans to increase the state pension age, "in reality" there may be "little choice" in the future.
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