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Social Justice

State pension rise due to triple lock will be ‘wholly unfair’ on benefits claimants, charities warn

The state pension rise according to the triple lock, meaning older generations will see their bank balances boosted by wage growth, will mean benefits recipients could be left behind

The state pension is set for another bumper rise from April because of the triple lock – meaning older generations could see a boost to their bank balance alongside wage growth.

But campaigners have said it will be “wholly unfair” if benefits are not similarly increased.

The government plans on increasing benefits in line with inflation in April, but this is lower than the rate of wage growth. This would mean that, once again, those on the lowest incomes are left behind. 

One in four pensioners in the UK are classified as a millionaire after retirement wealth has boomed, according to analysis of Office for National Statistics data by the Intergenerational Foundation

When wage growth was below inflation in June, ministers considered uprating benefits in line with the lower measure, in a drive to reduce benefits spending. Even though wage growth is now outpacing rocketing prices, ministers are still expected to increase benefits in line with inflation in April.

Pensioners have already seen a 14% rise in state pension in real terms since 2010, while working-age benefits like unemployment have fallen by 9% over the same period. The Resolution Foundation warns another big hike will “further skew our social security system to older generations”. 

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Hannah Slaughter, Senior Economist at the Resolution Foundation, said: “Britain saw the biggest employment fall outside of a recession this summer. This is the clearest sign yet that the Bank of England’s rate rising cycle is starting to cool the jobs market.

“But while higher unemployment should lead to lower wage growth in the coming months, it certainly hasn’t had that effect yet, with earnings growing at a record pace.”

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Under the triple lock, pensioners receive an annual pay increase tied to whichever is higher – CPI inflation, average earnings or 2.5%. It comes after wage growth hit 8.5% and rose above inflation for the first time in nearly two years. 

Slaughter added: “The short-term pay boost could end up benefiting pensioners more than workers as it is set to deliver a big permanent boost to the state pension next April. In this context it would be wholly unfair to hold down working-age benefits, especially as poorer households are already set to see their incomes fall next year.”



Alfie Stirling, Chief Economist at the Joseph Rowntree Foundation said: “Rising real earnings on average in July is good news. But the effects are not being felt equally and many workers in low paid sectors like retail and hospitality saw their pay fall further behind inflation.

“Thanks to the security of the triple lock, today’s data all but confirms the state pension will rise by 8.5% as well. But this throws the situation with benefits into stark relief, where the government has refused to confirm they will even follow their own rules and increase payments in line with September’s inflation rate in the usual way.”

Universal credit claimants are currently £35 short of the money needed to survive each week. “This is causing severe hardship which the voting public are already concerned is too high and too extreme,” Stirling added. “We need a legal commitment that the basic rate of universal credit at least matches the cost of essentials, with benefit rates not treated like a political football while more and more people are unable to put food on the table.”

But while ministers have been keen to stress their commitment to the triple lock, they are reportedly considering increasing working-age benefits by less than inflation next year.

The Institute for Fiscal Studies (IFS) has found the triple lock could increase spending by anywhere between a further £5billion and £45bn per year (in today’s terms) by 2050. This range is large because the triple lock creates uncertainty, meaning both the government and future pensions have difficulties planning their finances around it. 

Heidi Karjalainen, a research economist at IFS, said: “The triple lock makes it especially hard to know how much you might receive from a state pension and how much the state pension will cost the state in the future. 

“An additional real risk is that retaining the triple lock for too long increases state pension spending so significantly that it leads to insurmountable pressure for a much higher state pension age. This would particularly affect people with poorer health who struggle to remain in employment until they reach state pension age.”

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