𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

There’s been plenty of doom and gloom around retirees, much of it focused on the state pension triple lock, which has enemies everywhere. MPs on both sides of the Commons have been calling for the hugely popular uplift mechanism to be axed for years. Now we’re seeing a real concerted effort. Pressure is growing on Andy Burnham to replace the triple lock with something less generous. As new chancellor John Healey struggles to balance the books, the temptation must be huge.

A whole army of influential think tanks and organisations is lining up against it. They range from the left-wing Resolution Foundation and right-wing Institute for Economic Affairs. The Tony Blair Institute, Institute for Fiscal Studies (IFS) and now the British Chambers of Commerce have all called for its demise. And they’re only some of the triple lock’s enemies.

Plenty of politicians have added their voices, including prominent Tories such as former chancellor Jeremy Hunt and cabinet member Michael Gove, as well as Andy Burnham’s favourite economist Lord O’Neill and Zack Polanski’s Green Party. Many claim older people are being favoured over the young, and say axing the triple lock will save much-needed billions over the years.

Pensioners struggling with the rising tax bills and the cost-of-living crisis will be outraged, because for many the triple lock is a lifeline. Since introduction in 2011, it has helped lift millions of pensioners out of poverty.

Under the mechanism, the state pension increases each year by earnings, inflation or 2.5%, whichever is highest. According to the IFS, the state pension is 12% higher than if it had only risen in line with earnings. That’s an extra £1,500 a year for those on the maximum new state pension.

The triple lock is about to work its magic again, as we’re likely to learn on Tuesday. The inflation element is based on the September figure. But for earnings, it’s based on average wages over the three-month period from May to July.

We get that figure on Tuesday, and the forecast is that earnings will have grown by 4.1% across those three months. If correct, that’s the minimum pay rise state pensioners will get from April 2027. And it’s pretty good. More than inflation, which is currently 2.9%.

How much that means in practice depends on the pensioner. Today, somebody on the maximum new state pension gets £12,547.60 a year. A 4.1% increase is worth £514.45 a year, or £42.87 a month. Those who retired before April 6, 2016, get the older basic state pension, currently worth at most £9,614.80 a year. They’d get an extra £394.21 a year, or £32.85 a month.

We clearly have a two-tier state pension problem, and it’s only going to get worse. Both increase under the triple lock, but the basic state pension is lower, so each annual increase is worth less.

Many on the basic state pension get increments such as Serps or S2P, but these rise only with inflation each year. Which further widens the gap between the two, in years when wages are higher.

The latest inflation figure we have is for July, when consumer price inflation hit 2.9%. On Wednesday, the August figure is published. As I said, it’s the September number that counts. If that comes in higher than 4.1%, pensioners will get that instead. We’ll know on October 21.

First, let’s see what’s on offer on Tuesday. But one thing is certain. It will once again show why pensioners value the triple lock so highly.