Research by Quilter has found that pensioners will see a significant increase in payments in the years to come if the government returns to its triple lockdown promise. The Bank of England has predicted inflation could be 7.9% in the third quarter of 2023, which could result in a weekly state pension of just under £220. However, Prime Minister Rishi Sunak has yet to declare his commitment to the triple lockdown despite his predecessors’ pledge to return it.
The triple lockdown is a promise by the government to increase state pension payments either by inflation, or average earnings, or by 2.5%.
The higher rate will be used as the determining rate by how much the pensions will increase.
It was temporarily suspended last year due to the artificial inflation of wages following the pandemic-era furlough scheme.
To save money, the government removed the triple-lock link with average earners, which meant pensioners lost a higher than usual payment.
READ MORE: Brits urged to consider ‘simple’ boiler hack that could cut energy bills by £112 a year
Following this, Boris Johnson and Liz Truss pledged to return the triple lock to full capacity.
This comes as inflation returned to a 40-year high of 10.1% for September’s Consumer Price Index (CPI) inflation rate.
September inflation figures are taken into account as part of the triple lockdown and could be used to determine the rate of increase in state pensions.
Additionally, the Bank of England’s forecast that inflation will remain high at 7.9% means the elderly will see a similar increase in skyrocketing payments in 2024.
DO NOT MISS
As it stands, the new state full pension is currently £185.15 a week, while the basic equivalent is £141.85.
If the 10.1 per cent hike in payments is implemented, people on the state’s new full pension will get a weekly payment of £203.85.
By comparison, anyone on the basic state pension will get £156.20 a week from next April if the triple lockdown returns.
According to the Bank of England’s forecast, the new full state pension will be £219.95 and the basic pension will be £168.55 a week.
READ MORE: Attendance Allowance: 6 myths keeping millions of pensioners from claiming up to £370 a month
Shaun Moore, a certified financial planner at Quilter, pointed to the potential windfall retirees could get next year if the triple lockdown becomes a permanent factor again.
Mr Moore explained: ‘Sunak and Hunt will no doubt assess whether they honor the manifesto promise to keep the triple lockdown in place or choose to increase the state pension by a different measure in the face of a very difficult economic outlook. and uncertain.
“While it is costly to keep it in place for April 2023 given that it is set by the September 2022 inflation figure of 10.1%, it may prove simply too politically damaging to the to abandon.
“However, in the longer term, the Bank of England has predicted that inflation could fall to 7.9% by the third quarter of next year, so keeping the triple lock in place could prove less expensive from 2024.”
The financial expert explained how the triple lockdown has become a “political hot potato” as politicians debate raising the state pension.
He added: “Pensioners across the country will be eagerly awaiting the budget in the hope that the previous commitment to the triple lockdown will be honored, especially given the small 3.1% increase they received. in April 2022 when inflation was already around 9%.
“The triple lockdown is proving to be a political hot potato for the government, and Sunak will need to make a final decision back and forth before the fall reporting deadline to help retirees plan their finances, especially at a time where inflation continues to soar and finances are so top of mind.
“Whatever the outcome, triple locking is not working for everyone, and it may be time to assess whether there is a fairer way to increase the state pension while preventing more people from falling into the net of poverty and having to choose between heating or heating. while eating.”