It means the average earnings growth element of the state pension triple lock will be ignored for 2021/22, leaving the UK’s pensioners with a smaller increase than they were expecting under the Government guarantee. But now they know exactly how much they have missed out on, as new data has shown the latest average earnings growth figures – with the September figure being used in the triple lock.
For the three months to July, average earnings grew by 8.3 percent.
That is slightly down on the 8.8 percent increase that the UK saw for the three months to June, which represented an all-time high, but still would have represented a huge state pension boost for retirees.
Instead of the triple lock, it will now essentially a ‘double lock’ for next year, with state pension increasing by the higher of inflation or 2.5 percent.
Ian Browne, pensions expert at Quilter, commented on the new figures:
“Last week we saw the pensions triple lock promise broken and the average wage increase element of the scheme scrapped for this year. Data released today by the Office for National Statistics will likely be a source of grief for pensioners as the increase they could have received is made clear.
“This morning’s data reveals earnings growth continues to remain at unusually elevated levels as a result of the unwinding of the furlough scheme and the economic re-opening. Had the average earnings data been taken into account, pensioners would have gained an additional 8.3 percent on their pension this year.
“While many will be unhappy having now received confirmation of what they could have had, the data only really serves to prove that a one off scrapping of the average earnings element was the right thing to do. Had the triple lock not been amended, billions would have been spent on the pension increase during an already difficult year for public spending.
“Ultimately, the increase in average earnings was artificial and would have provided an unfair boost. We have seen the triple lock be tweaked previously to ensure that pensioners received a fair deal. The government introduced new legislation last year to ensure state pensions were uprated by 2.5 percent in recognition of their manifesto promise and commitment to pensioners – at a time when inflation was a mere 0.5 percent and earnings were falling due to the furlough scheme. While for some it will be a difficult pill to swallow, it is only right that the government reacted now it has gone the other way.”
Between January 2020 and June 2020 average earnings growth fell from 2.9 to minus 1.3, has been on the rebound since, with last month’s figure representing an all time high.