The triple lock pension is “in flux” as the pace of wage growth surges past the rate of inflation, according to GB News’ Business and Economics Editor Liam Halligan.
High wage growth has paved the way for a spike in retirement benefits, meaning state pension is on track to surpass £11,000 for the first time ever this spring.
The state pension triple lock ensures retirement benefits increase each year in line with the highest of September’s inflation, wage growth or 2.5 per cent.
In the three months to July, pay including bonuses rose by 8.5 per cent, the Office for National Statistics announced on Tuesday morning.
WATCH LIAM HALLIGAN'S ANALYSIS BELOW
The development means earning growth could push up the new state pension by over £800 to £11,502 a year in 2024.
According to GB News’ Liam Halligan, the hefty bill facing the public purse as a result of the triple lock could trigger its demise.
LATEST DEVELOPMENTS
“This triple lock is going to become a real political hot potato”, he said.
“It’s going to cost £9bn if you raise the base of state pension by that.
“Labour aren’t tying themselves to it, the Tories aren’t, it’s definitely in flux just because of the massive cost.
“It may be that this is the last year where the triple lock actually holds.”
The triple lock means the state pension increases by the highest out of wage growth, earnings and inflation PEXELSIt comes as the news broke Chancellor Jeremy Hunt was considering tweaking the formula surrounding the triple lock that would strip out bonus payments from the earnings figure used to calculate the state pension. This is despite Downing Street insisting they remain “committed” to the triple lock despite its cost.
One senior Treasury source told The Times: “It is something that is naturally being looked at given the wider economic situation,” they said.“Officials are drawing up policy proposals for ministers, but at this point no final decision has been taken.”
The original idea behind the scheme was about ensuring people’s pensions were not affected by gradual rises in the cost of living over time.
With pay and inflation running at higher levels than usual, the Government have faced questions over whether they would remain steadfast with their manifesto promise.
Speaking on the triple lock policy, Rishi Sunak’s official spokesman said: "You know there's a formal process for this when it comes to uprating but we remain committed to the triple lock which has seen 200,000 pensioners lifted out of absolute poverty after housing costs are taken into account."
The spokesman added that the Government are committed to ensuring the stare pension “remains sustainable and fair across generations”.
Work and pensions secretary Mel Stride said pensioners may not get the 8.5 per cent state pension rise that figures suggest.
He told the BBC: “There clearly is a difference if you take into account the non-consolidated elements of pay in recent times, but these are all decisions that I have to take with the chancellor as part of a very clear process, a statutory process actually, that I go through in the autumn.
"So I didn't want to get into the weeds of exactly how I'm going to go about that.
"But the overarching point about the triple lock is that we remain committed to it."
