New state pensioners would be receiving significantly less each year if it were not for the government's Triple Lock policy, with new analysis revealing an annual shortfall of £1,865.
The Triple Lock's Decade of Impact
The Department for Work and Pensions (DWP) uses the Triple Lock mechanism to increase the state pension every April. This policy guarantees that payments rise by the highest of three figures: average earnings growth, the Consumer Prices Index (CPI) measure of inflation, or 2.5%.
Over a roughly ten-year period since April 2016, this mechanism has delivered substantial boosts. For instance, in April 2023, pensioners received a record 10.1% increase following a period of high inflation.
Calculating the Payment Gap
Financial analysts have crunched the numbers to show what pensioners would be getting without the Triple Lock's protection. If increases had been capped at a flat 2.5% per year since 2016, the full new state pension would now be just £194.39 per week.
This is £35.86 less each week than the current actual rate, adding up to an annual deficit of £1,865 for those on the full new state pension. Even if payments had only risen in line with inflation over the same period, pensioners would still be around £1,485 worse off per year.
The State Pension and the Cost of Living
Despite these protective increases, experts warn that the state pension alone is insufficient for a decent standard of living. Erin Yurday, CEO and founder of NimbleFins, commented on the findings.
"While the triple lock has raised pensions more quickly than wages in recent years, those rises are from a low baseline and still fall short of enabling a basic standard of living," Yurday said. "Without the triple lock, pensioners would be hundreds of pounds poorer each month."
Research from Pensions UK suggests a single pensioner needs at least £13,400 a year for a basic retirement lifestyle. The full new state pension currently provides almost £500 per year less than this minimum threshold.
For a moderate lifestyle, a single person is estimated to need £31,700 annually, with a comfortable retirement costing around £43,900 per year—more than double the state pension amount.
"Our analysis shows just how vital the triple lock has been in protecting older people from inflation and rising bills," Mr Yurday added. "But it also highlights a deeper issue - the state pension alone is not enough to live on, and many pensioners are still struggling despite these increases."
