State pension boost as triple lock ‘will be reintroduced’ after Covid suspension

Alastair Stewart sends warning about future of pensions

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Pensioners will have been keeping a close eye on inflation figures in recent months as they eagerly awaited how much their pots will be boosted by. Many were anticipating a huge 8.3 percent rise – in line with the increase of average earnings – until the Treasury confirmed in September that the triple lock would be suspended. The Government has instead opted for a double lock, meaning the state pension will increase in line with September’s inflation figures – 3.1 percent. Released on October 20, the figures mean the basic pension is set to rise by £4.25, from £137.60 per week to £141.85 per week, with the full new state pension growing by £5.55, from £179.60 per week to £185.15 per week.

Had the triple lock been maintained, the basic state pension would have jumped to £149 per week and the full new state pension to £194.50 per week.

The Government promised to reinstate the triple lock after the next financial year – but many will be sceptical given Prime Minister Boris Johnson and his colleagues have broken pledges on taxes and pension in recent months.

But former pensions minister Steve Webb told Express.co.uk that the Government will indeed bring back the policy.

He said: “I think they will reinstate the triple lock, and I say that for two reasons.

“Firstly, because they didn’t actually have to say they would. They could have just said ‘this is what we are doing for next April, and then we will have a review.’

“But they were much firmer than I expected, they quite clearly said we will reinstate it.

“Secondly, it’s not like it will be after an election when we get to find out whether they keep this promise. We will get to see before we vote again.”

However, Mr Webb has warned that pensioners will endure a squeeze on living standards if inflation continues to rise following the release of September’s figures.

He explains: “The actual number they use is the September inflation figure. If it’s around three percent in September, that doesn’t mean to say that it won’t rise to five percent later down the line.

“This is important because I think we will see a squeeze on pensioner living standards next year. If you get a three percent rise, but by next April bills go up, your cost of living may have gone up by as much as six percent.”

Last week, The Bank of England’s Chief Economist warned that inflation is likely to reach five percent by early next year.

Huw Pill, who succeeded the Bank of England’s former Chief Economist Andy Haldane last month, said he would “not be shocked” to see inflation reach five percent or above in the coming months.

Joe Staton, client strategy director at GfK, told the BBC: “More and more shoppers expect that costs for goods and services will jump dramatically in the next 12 months.

“This rapid increase will impact our ability to shop and save, and our willingness to spend, at a time when our incomes are outpaced by inflation.”

Tony Brown, Chief Executive of New Start 2020, which owns Beales department stores, told the BBC’s Today programme last week that retailers are facing higher prices, and are therefore passing that cost onto consumers.

He warned that the cost price of a vacuum cleaner, for example, had risen from £49 last year to £79.

Mr Brown continued: “The wholesalers are passing those costs onto us.

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“So that cost price has to be passed on, we can’t absorb it. We are passing on a proportion of that and having to take a hit on the rest, so it does dilute margins.

“It is a tough time for retail out there and I think what we need more than anything is some sort of calmness in the supply chain.”

Chancellor of the Exchequer Rishi Sunak said yesterday that inflation and interest rates will influence his thinking for the upcoming Budget this Wednesday.

He told Times Radio: “Inflation, interest rates ‒ those are two of the factors which I have to think about as I determine what’s the appropriate fiscal policy, what’s the right level of tax and borrowing and spending.

“Particularly because our public finances are sensitive to changes and things like inflation and interest rates, which have been very low for quite a while.”

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