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Pensions to rise by 18 per cent next year (spoiler alert: no they won’t)
Rishi Sunak is being forced to consider ways of getting round the “triple lock” on pensions next year amid signs that the bounce back in wages for furloughed workers could put state pensioners in line for an 18% increase.
While the Treasury said it had no plans to ditch the arrangement – by which pensions rise by the rate of inflation, average earnings or 2.5%, whichever is greater – the chancellor has accepted a problem is looming in 2021 as the economy recovers from the coronavirus lockdown.
... Sunak’s dilemma has been caused by forecasts from the Office for Budget Responsibility showing a drop of more than 7% in earnings this year as a result of millions of furloughed workers receiving 80% of their wages, which will be followed by an 18% increase next year as they return to full pay.
Under the triple lock – which Boris Johnson pledged to keep in the Tory’s 2019 election manifesto – pensioners will receive a minimum increase of 2.5% in this year’s uprating but will be in line to receive 18% the following year.
Don’t forget Guarantee Pension Credit is earnings linked.
Bye bye triple lock, it’s been nice knowing you…..