Andy Burnham, the new Labour Party government leader and Prime Minister who entered Number 10 Downing Street on Monday, is planning an extra £24 a week for younger state pensioners. This comes as he commits to maintaining the triple lock on the state pension.
Details of the Proposed Increase
The full rate of the new State Pension is currently £241.30 a week. Under the triple lock, the state pension rises by the highest of inflation, average earnings growth, or 2.5 per cent. A 2.5 per cent increase would bring the weekly amount to £247, an increase of £6 a week or £24 a month. The full new state pension is available to men born after 1951 and women born after 1953.
Cost of the Triple Lock
The Office for Budget Responsibility estimates that the triple lock will cost around £15.5 billion by 2030, up from the original estimate of £5.2 billion when it was introduced. The triple lock was introduced by the Conservative Party and Liberal Democrats coalition in 2012.
Burnham's Commitment
Mr Burnham has stated that it is “important” to continue the Labour manifesto commitment to maintain the triple lock. In an online Q&A, Reddit user Masam10 asked: “Is it time to abolish the triple lock? Or at least have that discussion?” The Makerfield MP replied: “I appreciate there’s a lot of debate about this but it is important that the commitment in the manifesto stands.”
Historical Context
The creator of the triple lock metric, Sir Steve Webb, told Money Week: “I became pensions minister in 2010. But in the previous 30 years, the state pension had been falling in value relative to what people earn, so it just went up with inflation most of the time. But the problem with that is if you earn and earn and then stop earning, then the thing you fall onto when you stop earning needs to be connected to some proportion of what you were earning. Otherwise, you just fall off a cliff and your standard of living crashes. So, the state pension needs to be pegged to a proportion of what people are earning and for 30 years, [prior to the triple lock] that had not happened.” He added: “So, the point of more generous indexation post 2010 was to undo 30 years of damage. I’m not embarrassed or ashamed; I am proud of the fact that the state pension has been over-indexed.”
