Triple Lock

Haybarn

Has anyone worked out if the state pensioner has actually benefitted from the so called Triple Lock, best of 2.5%, CPI or average earning since the change replaced the previous RPI method of increasing state pensions?

jamesd

For 2011 the increase was based on RPI, wages or 2.5% so the relevant increase will be for 2012, 2013, 2014 and 2015. Page 15 of that document has the increases through 2015-16 in a table.

2011 used 4.6 RPI 4.6 CPI 3.1 earnings 2.0 before change from RPI
2012 used 5.2 RPI 5.6 CPI 5.2 earnings 2.8
2013 used 2.5 RPI 2.6 CPI 2.2 earnings 1.6
2014 used 2.7 RPI 3.2 CPI 2.7 earnings 1.2
2015 used 2.5 RPI 2.3 CPI 1.2 earnings 0.6

So at the moment it's behind RPI by 0.8% (simple adding).

This will probably be reversed in 2016-17 because inflation is so low - 0.9% RPI to March, 0.0 CPI to March, both the whole twelve months, not just since the last increase was announced. 2.5% is likely to be well above both CPI and RPI inflation, just as it was more than them last year.

So overall the triple lock seems to be something that is resulting in higher increases than RPI. That's expected, though usually it'd be due to wages which tend to increase long term by around RPI+1%. The breaking of the wages lock during the Thatcher years, replacing it with RPI, produced a steady decline in the value of the state pension compared to earnings. Wage increases have been suppressed during the recovery by unemployment and that's probably still having some effect even though more people are now working than ever before since recent records began - the difference is due to growth in population.