What is the state pension triple lock and how does it work?

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What is the state pension triple lock and how does it work?

The Chancellor’s decision to protect the state pension triple lock was one of the most

headline-grabbing aspects of the recent Budget.

What is the triple lock and how does it work?

But what exactly is the triple lock and what does it mean? In short, it’s a mechanism designed to make sure the state pension doesn’t lose value, so it will go up by whichever is highest of the following measures:

Average earnings

The rate of inflation (as per the Consumer Price Index) 


So, if, for example, average earnings went up by three per cent, the state pension would go
up this amount, provided the rate of inflation was also lower than this amount. Or if average earnings went up by two per cent and inflation increased by three per cent in the same year, the state pension would go up by the latter amount.

The increase comes into effect each April.

The triple lock was introduced by Conservative/Liberal Democrat coalition government in 2010. They were designed to ensure the value of the state pension was not overtaken by the increase in the cost of living or the working population's income. 

The Chancellor’s pledge to protect the state pension triple lock was therefore very
significant in light of the current cost of living crisis and inflation being at a 40-year high.
With this guarantee in place, pensioners are in a stronger position to withstand the tough
economic climate and make ends meet at a time when so many people are really feeling
the pinch.

However, it should be noted that Jeremy Hunt didn’t commit to saying how long the
measure would remain in place.

This is a costly policy for the government at a time when it wants to spend public money
more efficiently and bring down public debt. So, there’s every chance we could again be
asking about the future of the triple lock before the end of the next financial year.
We should also stress that the full state pension is currently £185.15 per week, which works
out to less than £10,000 a year.

So even though it’s due to rise by £870 in April 2023, that’s still far from being enough
money to live off, let alone enjoy the quality of life that you aspire to during your

Has the triple lock been suspended in the past?

During the Covid-19 pandemic the triple lock was suspended. This was because of an unusually large rise in average earnings following the end of the government's furlough scheme.

What other financial help can pensioners get? 

If they have no other source of income, those above retirement age may also be entitled to Pension Credit on top of the basic state pension. The chancellor confirmed that this will also increase in line with the CPI from April 2023.  

If you get Pension Credit, you may also be entitled to other financial support, including housing benefit, a reduction in council tax, and help with your heating costs through the Warm Home Discount Scheme.

As of August 2021, 1.4 million people received Pension Credit, although many of those who are entitled to the extra help do not claim it. 

People born before 26 September 1956 are also entitled to the annual Winter Fuel Payment. 

How can I ensure that I am comfortable in retirement? 

You should make sure you have plans in place to supplement the state pension, such as workplace pensions, private pensions and other investments, and ensure that these represent the bulk of your income.

Then you can set yourself up to enjoy a much more comfortable lifestyle during your
retirement, having the means to live the kind of life that you want and deserve.
If you have any questions about saving for retirement and making the most of your
pensions, we’re here to help and will be happy to speak with you.

Get in touch and take charge of your retirement planning today.