Is the triple lock being scrapped? Concerns over fairness rise | Personal Finance | Finance


Discussions between the Treasury and Number 10 have been held about suspending the guarantee on pension rises, more commonly known as the triple lock. It comes after the news broke that National Insurance contributions could be raised later in the year to pay for care for elderly people and the ongoing NHS backlog.

National Insurance contributions are expected to increase to payments of one percent, a penny for each pound.

It is expected the change will raise £10 billion a year for the Treasury.

Mr Johnson is understood to favour plans formulated by Sir Andrew Dilnot, a former Government health adviser, to limit costs to £50,000 per person so families do not have to sell their homes to pay for care later in life.

However, as pensioners do not pay National Insurance, the burden falls on working-age people to pay for care that does not directly benefit them.

What is the triple lock?

The triple lock is a Government pledge that the basic State Pension and new State Pension must rise each year in line with the highest of three possible figures: the rise in prices, the rise in earnings or 2.5 percent, whichever is higher.

Before 2011, the State Pension rose in line with the retail prices index measure of inflation, which was consistently lower than annual rises in earnings or 2.5 percent.

The last few years – in which earnings growth has been extremely weak – have seen triple lock indexation boost the value of the State Pension relative to both average earnings and prices.

Pensioners have seen their incomes rise at almost double the pace of the average worker in recent years.

However, Mr Sunak has previously signalled the triple lock could be put aside if average earnings are artificially skewed by the pandemic.

Despite various changes taking place to tackle the cost of the pandemic and preexisting issues, it is understood that discussions have centred on maintaining the Triple Lock while increasing National Insurance contributions.

A source said: “They are having conversations about this and whether the two things can come together.

“They are being considered together and that’s certainly what people want to do.”

Any change will depend on the data available closest to the autumn when the next Budget is due.

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