State pension could rise by £700 – forcing Sunak to axe triple lock AGAIN | Personal Finance | Finance

Sunak has already axed the triple lock mechanism this year, in a move that could cost pensioners almost £500 in lost State Pension. He could do the same next year, if he decides pensioners are getting too big a pay rise again.

The triple lock increases the State Pension either by inflation, earnings or 2.5 per cent, whichever is higher.

If Sunak had implemented this from April, pensioners would have received a pay rise 8.3 per cent, in line with earnings.

Instead, the Department for Work & Pensions (DWP) said it would “temporarily suspend” the earnings element of the triple lock, blaming “skewed and distorted” figures due to the pandemic. 

The move will cost pensioners on the new State Pension a staggering £486 over the next 12 months.

There are growing fears that Sunak could tamper with the triple lock again as inflation skyrockets, with the Bank of England now predicting price growth of 7.25 per cent in April.

Increasing the State Pension in line with that would protect pensioners against the cost of living squeeze, but at a huge cost to the Treasury.

From April 6, the full basic State Pension will rise by £5.55 to £185.15 a week. If that was increased by 7.25 per cent in April 2023, it would climb to £198.52 a week.

That’s a rise of £13.42 a week – which adds up to almost £700 a year.

The actual increase will be based on this September’s inflation figure, which could be even higher than 7.25 per cent as prices rocket.

Yet pension experts fear the Government could claim inflation has also been “skewed and distorted” by the pandemic, and use this as an excuse to axe the triple lock again.

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Becky O’Connor, head of pensions and savings at Interactive Investment, said the Government has already set a precedent by scrapping the triple lock once. “Now the stable door has opened, it is possible to imagine it happening again.”

She added: “If the Government decided the inflation figures were too high to use for the next State Pension uprating in 2023/24, we now know that it can simply decide not to use them.”

If inflation is still raging in September but then falls back, that would make it easier for the Chancellor to argue that matching the increase is unjustified.

O’Connor said: “We remain hopeful the Government is true to its word on reinstating the triple lock after this year.

“However, raising the State Pension by unusually high amounts is costly and the temptation may be too great for the Government to resist tinkering with it again.”

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The Government will come under “huge pressure” to apply the triple-lock guarantee in full next year, even if inflation remains stubbornly high, said Stephen Lowe, director at retirement specialists Just Group.

“The DWP clearly stated it was a temporary suspension due to what it called ‘skewed and distorted’ average earnings figures due to the pandemic. 

“It will be much harder to argue that stubbornly high inflation is such a statistical anomaly or that pensioners reliant on State Pension won’t be feeling the pinch.”

However, Lowe warned that even if the Government does reinstate the triple lock, there is a major question mark over its future.

“The Conservatives have pledged to keep it in place only until 2024 and opposition parties support it, but as we have seen, events can very quickly get in the way of policies and promises.”