State Pension: What the triple lock shake-up could mean for YOU

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The Conservatives pledged in their manifesto to maintain the triple lock on the State Pension. However, reports have indicated the triple lock could be amended due to the effects of the coronavirus pandemic.

How does the triple lock work?

Every year the State Pension increases by the same rate as inflation, earnings or 2.5 percent, depending on whichever is higher.

But this year, earnings have risen significantly due to the coronavirus pandemic.

Compared to previous years, the State Pension would increase by a staggering amount for 2022/2023 due to the earnings aspect of the triple lock.

State Pension claimants could see a rise as high as eight percent next year.

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State Pension: Rishi Sunak

State Pension: What the triple lock shake-up could mean for YOU (Image: GETTY)

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The triple lock standard used to calculate the State Pension uplift could undergo major changes (Image: GETTY)

What could the triple lock changes mean for you?

If the triple lock pledge is honoured, then State Pension claimants would receive significantly more money this year than in previous years.

But it appears the triple lock standard used to calculate the State Pension uplift could undergo major changes post-pandemic.

According to The Times, Chancellor Rishi Sunak is expected to announce a temporary halt to the triple lock manifesto pledge.

Chancellor Rishi Sunak

Chancellor Rishi Sunak could announce a temporary halt to the triple lock manifesto pledge (Image: GETTY)

An announcement on the triple lock is expected at some point this week.

The announcement is also expected along with a widely reported update on whether National Insurance will be increased to pay for health and social care reform.

Mel Stride, chairman of the Treasury Committee, said this week the State Pension triple lock is “unrealistic and unfair” this year.

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Mr Stride said: “Over the last decade, the pensions triple lock has successfully protected the incomes of older people, who often have limited opportunities to increase their earnings.

“However, the triple lock is unsustainable in its current form.

“A potential almost double-digit percentage rise is unrealistic and unfair, with knock-on effects for the public finances.

“Given that average wage levels have been skewed by the unprecedented events of the past 18 months, the Chancellor should temporarily suspend the wages element of the lock.

“This is a sensible approach which will aid our recovery from the pandemic.”

Until an announcement is made by the Government, it is not clear exactly how altering the triple lock will affect future State Pension payments.

But if earnings are removed as an aspect of the triple lock, in theory, there would be a “double lock” instead.

In this case, the State Pension is still likely to increase from April 2022.

However, it will not increase by as high a rate as earnings, and will instead be calculated based on inflation or the 2.5 percent rate.

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