triple lock

bdba13

As the chancellor has done nothing to help pensioners directly I am reminded that I find it difficult to understand the reason for not using the triple lock.
Those in work were furloughed last year and were helped out, so how does it equate that returning to normal wages,increased wages by 7% or so.
Did the average worker get an actual pay rise of 7%.   No they did not. When the rate that pensions were to go up was made, it was widely thought that the increase would be so low as to put pensioners at risk of being badly hit, it has. I read all the time of government mismanagement with public money, the end result pensioners/working people suffer.

Silvertabby

bdba13 said:

As the chancellor has done nothing to help pensioners directly I am reminded that I find it difficult to understand the reason for not using the triple lock.
Those in work were furloughed last year and were helped out, so how does it equate that returning to normal wages,increased wages by 7% or so.
Did the average worker get an actual pay rise of 7%.   No they did not. When the rate that pensions were to go up was made, it was widely thought that the increase would be so low as to put pensioners at risk of being badly hit, it has. I read all the time of government mismanagement with public money, the end result pensioners/working people suffer.

You've contradicted yourself!

In para 1 you that you can't understand why the triple lock wasn't used for this year's increase. Then, in para 2, you go on to say that worker's wages were 'increased' by 7% due to the restoration of furloughed (reduced) salaries.  You can't have it both ways.

Speaking as the wife of a State pensioner, and as someone who will be a State pensioner in her own right very soon, I never expected that this year's increase would be based on artificially inflated figures.  Just ask a nurse how much of an increase they received this year....

Yes, the cost of living has increased since this April's increase was determined by CPI as at the end of last September, but that's nothing to do with the triple lock. 
The current cost of living hike applies to everyone, not just pensioners, so the government can't just shovel out shedloads of money to all pensioners at the cost of the (also struggling) working taxpayers.

I expect that many of the contributors to these pension boards are, like us, comfortable enough not to need any means tested benefits.  That said, I'm sure I speak for all (most!) of us who would be happy to see additional help targetted to those who really need it, rather than scatter gunning an artificially high State pension increase to those of who really don't.

QrizB

Yes, like Silvertabby says, your question contains its answer.

• In 2020, wages fell.
• In 2021, they rose back to where they were, more or less.

Albermarle

Over the last few years , the state pension has increased more than the average wage has , albeit not from a very good level .
The current blast of inflation will mean the SP  will get a good hike next year, probably just when inflation is dropping.

Silvertabby

To put things into even more perspective...

The old basic State pension in 2009 was £95.25 per week.

Had it risen by CPI only, in 2021 it would have been £119.48 per week (increase factors taken from the government PI tables, so accurate).

Had it risen by average salaries only, in 2021 it would have been £122.23 per week (had to dig for the figures, but don't think I'm far off).

The actual basic State pension in 2021 was £137.60 per week, thanks to the triple lock.  Sorry, but you can't have the cake, the icing AND the cherry every single year, particularly as this year's cherry was fake.

xylophone

The actual basic State pension in 2021 was £137.60 per week, 

It's hardly a fortune!

That said, I would imagine that for most there will be at least some grad/ASP and there is the Pension Credit for the most disadvantaged.

But what about the change from RPI to CPI (from 2011)? I think I can recall only one anomalous year when RPI was lower than CPI.

And for those occupational pensioners fortunate enough to keep the RPI link ("hard wired" into the rules of their scheme) what about the next "welshing on the deal"

https://www.ftadviser.com/pensions/2021/04/09/pension-schemes-press-ahead-with-legal-action-on-rpi-changes/

I fear that government has a long history of tweaks to pensions, most ofter to the advantage of the government?

https://forums.moneysavingexpert.com/discussion/comment/60839535/#Comment_60839535

Speaking as the wife of a State pensioner, and as someone who will be a State pensioner in her own right very soon, 

Well yes....... but both you and your husband (and I acknowledge your service) are fortunate enough to benefit from RAF pensions

I expect that many of the contributors to these pension boards are, like us, comfortable enough not to need any means tested benefits. 

as this year's cherry was fake.

https://www.thisismoney.co.uk/money/comment/article-10198117/BARONESS-ALTMANN-Cutting-state-pensions-betrayal.html

This figure was inflated by year-on-year distortions from pandemic measures such as furlough, and using it would cost £5billion – unaffordable when public finances are under exceptional strain.

But the House of Lords has pointed out that the 8.3 per cent figure could be adjusted to account for the pandemic impact. 

The Government claims it cannot produce reliable adjusted figures so it must abandon earnings protection and use 3.1 per cent, based on September's inflation rate. Well, the Government's claim does not stand up to scrutiny. With all the statistical experts at the Government's disposal, of course they can produce a reasonable figure. 

And in fact, had pensions increased by 8.3%

https://www.bankofengland.co.uk/knowledgebank/will-inflation-in-the-uk-keep-rising

actual inflation may only just have been exceeded.

It should also be remembered that wealthier pensioners will be paying back some of their increase in the income tax that they pay.

I can think of one couple where the income tax paid by the husband goes a very long way to covering what the wife receives in state pension!

Thrugelmir

bdba13 said:

As the chancellor has done nothing to help pensioners directly I am reminded that I find it difficult to understand the reason for not using the triple lock.
Those in work were furloughed last year and were helped out, so how does it equate that returning to normal wages,increased wages by 7% or so.
Did the average worker get an actual pay rise of 7%.   No they did not. When the rate that pensions were to go up was made, it was widely thought that the increase would be so low as to put pensioners at risk of being badly hit, it has. I read all the time of government mismanagement with public money, the end result pensioners/working people suffer.

Mr Starmer appears to be struggling to offer a coherent alternative. Blaming someone else appears to be a national pastime. Money has to be earnt not simply gifted. The magic money trees have finally been retired. Party is over. Now the bill has to be paid. Being fiscally prudent is unpopular but for the best for everyone in the longer term. 

Silvertabby

xylophone - yes, I agree with you to a certain extent.

I used the old basic State pension figures for simplicity.  No-one lives in just that - they either have SERPS/SP2 or a contracted out pension or, subject to savings, Pension credits.  I believe I'm right in saying that a pensioner on nothing but the State pension could get pension credits, housing and council tax benefits, etc, taking them up to £18K  per year tax free.  No consolation to those who don't get housing benefit because they are owner occupiers, but they do have a valuable asset (the house) that they could at least partially benefit from.  Want to leave the house to children?  Very noble, but no decent child would want their parent(s) to live on the breadline when they could release capital by downsizing or taking some form of equity release.  Or is that just me?

Yes, we have over 50 years of RAF pensions (your acknowledgement of our service is appreciated) plus 20 years LGPS (me) and 8 years Civil Service (him) so we are very comfortable.  But we are certainly not alone in enjoying this level of retirement income, as many posters on these boards earned/saved way more than we ever did.  We both left school at 15, because our parents needed our income.  I did beg to stay on to at least do my 'O' Levels, but my parents just couldn't afford for me to 'swan around in school' when I could be 'out earning'.  Our earnings peaked during our RAF service but, even as SNCOs, we never breached the supertax limit. 

Even if this year's pension increase had been 8%, for many that still wouldn't be enough to cover the current cost of living hike, especially in relation to fuel bills.  My point is that there must be a way of directing extra help to those who really need it, rather than an across the board increase.  

xylophone

Even if this year's pension increase had been 8%, for many that still wouldn't be enough to cover the current cost of living hike, especially in relation to fuel bills. 

No, but an increase of 8% would have been  a vast improvement on 3.1%!

Those eligible for PC (even the smallest amount) can indeed  be  in a much better position than those whose income puts them into the just managing category.

https://forums.moneysavingexpert.com/discussion/comment/60903791/#Comment_60903791

https://forums.moneysavingexpert.com/discussion/comment/55098239/#Comment_55098239

The "just managing" (say state pension and modest occupational pension) could be paying full and increasing  CT/rent etc and having no help at all with those 8% plus increases on food/fuel/gas/electricity etc etc etc.

Albermarle

But the House of Lords has pointed out that the 8.3 per cent figure could be adjusted to account for the pandemic impact. The Government claims it cannot produce reliable adjusted figures so it must abandon earnings protection and use 3.1 per cent, based on September's inflation rate. Well, the Government's claim does not stand up to scrutiny. With all the statistical experts at the Government's disposal, of course they can produce a reasonable figure. 

If I remember rightly , it was discussed on here that the most obvious way forward was some sort of compromise figure, and probably that was what would happen . However that seemingly sensible idea apparently did not get past Rishi's abacus .

My point is that there must be a way of directing extra help to those who really need it, rather than an across the board increase.  

This is a popular topic on the more serious news channels, and it seems obvious that help should be better targeted .

However it often is not, due to some devil in the detail / being difficult to implement, but also politically there is an anxiety  not to always support the poor, by squeezing the middle ( voters ) more. By not squeezing  the middle , the wealthier also can escape the pressure sometimes as well.

zagfles

Albermarle said:

But the House of Lords has pointed out that the 8.3 per cent figure could be adjusted to account for the pandemic impact. The Government claims it cannot produce reliable adjusted figures so it must abandon earnings protection and use 3.1 per cent, based on September's inflation rate. Well, the Government's claim does not stand up to scrutiny. With all the statistical experts at the Government's disposal, of course they can produce a reasonable figure. 

If I remember rightly , it was discussed on here that the most obvious way forward was some sort of compromise figure, and probably that was what would happen . However that seemingly sensible idea apparently did not get past Rishi's abacus .

Using an index of the "triple lock" elements would be the fairest, ie maintain 3 indices of prices, wages and 2.5%pa increases, and pay whichever index is highest. But this wouldn't work politically, people wouldn't understand why some years there'd be a zero increase.

The triple lock makes no financial sense anyway - it's purely a political thing. The 2.5% underpin started after "peanuts" headlines in the Sun when inflation was very low, because it was claimed that's all pensioners could buy with the increase. The obvious point the Sun missed was that pensioners weren't supposed to be able to buy ANYTHING extra with the increase, it was supposed to maintain their spending power not increase it. But instead of explaining this to the clueless, the govt decided to introduce the 2.5% underpin.   

My point is that there must be a way of directing extra help to those who really need it, rather than an across the board increase.  

This is a popular topic on the more serious news channels, and it seems obvious that help should be better targeted .

However it often is not, due to some devil in the detail / being difficult to implement, but also politically there is an anxiety  not to always support the poor, by squeezing the middle ( voters ) more. By not squeezing  the middle , the wealthier also can escape the pressure sometimes as well.

Why? The more you "target" help, ie means test, the less incentive there is to save. Why save when you'll get penalised by having your pension reduced, or getting less in top-ups? The whole point of the pension reforms of the last decade or so has been to reduce means testing so people are encouraged to save for their retirement.