As ‘alarm bells ring,’ Rishi Sunak is under additional pressure on Triple Lock.
THE STATE PENSION triple lock has been rumored to be in jeopardy, but fresh evidence suggests that Chancellor Rishi Sunak may face even more pressure.
The State Pension triple lock ensures that the highest of three key components, inflation, average earnings, or 2.5 percent, is increased each year. It has been stated that the program may be jeopardized due to distorted salary data as more people enter the workforce, which is expected to reach 8% by 2020. When Mr Sunak said last week that the outcome would be fair for “both pensioners and taxpayers,” he seemed to imply that the idea could be debated.
And new information released this morning appears to create an even more difficult picture for the Chancellor.
Annual total pay rise reached 7.3 percent in the three months to May, according to data from the Office for National Statistics.
When comparing May 2021 to May 2020, the average increase in earnings was 8.6 percent.
Even after accounting for inflation, total compensation increased by 5.6 percent in the three months to May, with regular pay increasing by 4.9 percent.
As a result, the Chancellor is faced with a choice: boost the state pension by a significant amount or abandon his party’s election vow.
While the government has reiterated that the triple lock will remain in place, several experts question if this is practical.
Aegon’s Pensions Director, Steven Cameron, offered his thoughts on the subject.
“Today’s increase in wages growth adds to the pressure on the chancellor as he considers the expenses of keeping the Government’s Manifesto pledge to the state pension triple lock,” he said.
“Because the triple lock costs the government £0.9 billion for every one percent increase, Rishi Sunak may still be hoping for a drop in average earnings before the all-important July data, which will be released in September, but time is running out.
“Without changes to the triple lock formula, the current trajectory of average wages is likely to cause a massive increase in the state pension of over 8% next year and every year after that, at a cost of over £7 billion.”
The Chancellor’s recent statements have raised questions about the policy’s future.
In an interview with the BBC, Mr Sunak agreed that “intergenerational fairness” was a priority for the government. “Brinkwire News in Condensed Form.”