triple lock

Silvertabby

nigelbb said:

Silvertabby said:

p00hsticks said:

xylophone said:

and although it would have been nice, I can spend that without even thinking about it. 

Those on full  or part new state pension are in the minority.

Most pensioners are currently on  old state pension.

An increase of over £11 a week on the basic state pension could make a difference to the "just managing"?

I can't locate figures at present, but just because they are on the 'old' state pension it doesn't necessarily mean that they'll be receiving less that if they were on the new - in fact, if contracted in, they could be getting considerably more. (Being contracted out would indicate that there is an accompanying private pension somewher along the line).

And as another poster had pointed out, if their only income is the old basic pension, then unless they have considerable savings they'd be eligible for Pension Credit, which in turn passports them to other benefits, such as Council Tax reduction, free TV licence etc

Max basic State pension plus SERPS/SP2 under the old scheme is something like £310 per week - more if the pensioner deferred payment, when the pension would be increased by over 10% per year.  Realistically, though, while £310 plus is exceptional, State pensions of over £200 per week are not.  The long term aim of the new single tier pension is to save money, not to throw more at those who reached SPA after 2016.

But the problem here seems to be those on the old State pension who were low earners throughout their working lives and so only accrued minimal levels of SERPS/SP2.  These are the ones who may need to be encouraged to apply for pension credit and all the extras that opens the door to, but it's the coming hike in fuel bills that is causing the most alarm at the moment.  

The long term aim is to ratchet up the real value of the new single tier pension as it is so low compared to other comparable countries. That's why there is the triple lock so the pension rises by at least 2.5% every year.

Please... not that old chestnut about other pensions being so much higher than the UK state pension...

If you are talking about Euro pensions, they are hybrid schemes - part State and part private - and both employees and employers pay in way more than we do in NI.  A more accurate comparison would be a Euro pension against the UK State pension PLUS all the occupational/private pensions the UK pensioner paid into (or could/should have paid into).

The German pension, in particular, is in three parts.  Part 1 is on a par with the old UK basic State pension.  Part 2 is on a par with UK occupational pensions (with a salary link) and Part 3 is on a par with UK private pensions.

Dig deep enough on Google and you will find stories of elderly German widows, who were housewives and so never accrued pensions in their own right, who are subsisting on just the Part 1 pension.  Plus, unlike the UK with its pension credit and housing benefits, that's the lot for the German pensioner.  Those who have to pay their own rent have no option but to  feed themselves from soup kitchens and foodbanks.  Daily.

The losers in the new single tier pension scheme will be those who pay full rate NI (contracting out having ended in 2016) but will be capped at £179.60 instead of going on to rack up £200/£300.

sevenhills

Albermarle said:

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.

The problem is that the government use the CPI measure of inflation in September, applied in April the following year. So is the rise for the previous year? The problem is that many poor people's energy bills has increased by £100 per month, for someone with an income of £1000 per month, that is a massive increase.
The CPI measure of inflation is not applicable to ordinary people.
Yes, we all use common sense when discussing the triple lock, but the government made a promise.

QrizB

sevenhills said:

... but the government made a promise.

Politicians, political parties and governments make lots of promises, but only Parliament can do anything to hold them to it. And Parliament has chosen not to.

Grumpy_chap

sevenhills said:

The problem is that the government use the CPI measure of inflation in September, applied in April the following year. So is the rise for the previous year? The problem is that many poor people's energy bills has increased by £100 per month, for someone with an income of £1000 per month, that is a massive increase.
The CPI measure of inflation is not applicable to ordinary people.
Yes, we all use common sense when discussing the triple lock, but the government made a promise.

Yes, this is a challenge, but the system (in an attempt to deliver certainty) uses autumn data to set the increase for next spring.  That happens year-on-year, so there is a lag built in.  Makes it hard when inflation is rising.  Makes it look more generous when inflation is falling.

In terms of taking the triple lock through the very unusual salary bounce of COVID, what else was the Government to do?  Calculate the 2020 rise as per normal, but only pay 80% pension for a year and then applied the triple lock rules reflecting the salary recovery to allow the pension to return to 100%.  OR, would that have got untold criticism also?

molerat

Grumpy_chap said:

sevenhills said:

The problem is that the government use the CPI measure of inflation in September, applied in April the following year. So is the rise for the previous year? The problem is that many poor people's energy bills has increased by £100 per month, for someone with an income of £1000 per month, that is a massive increase.
The CPI measure of inflation is not applicable to ordinary people.
Yes, we all use common sense when discussing the triple lock, but the government made a promise.

Yes, this is a challenge, but the system (in an attempt to deliver certainty) uses autumn data to set the increase for next spring.  That happens year-on-year, so there is a lag built in.  Makes it hard when inflation is rising.  Makes it look more generous when inflation is falling.

In terms of taking the triple lock through the very unusual salary bounce of COVID, what else was the Government to do?  Calculate the 2020 rise as per normal, but only pay 80% pension for a year and then applied the triple lock rules reflecting the salary recovery to allow the pension to return to 100%.  OR, would that have got untold criticism also?

There was an ONS figure for those in continuous employment which IIRC was around 4%.  I am sure they could have winged it and sold that one rather than completely ignoring wage increases.

xylophone

but the government made a promise.

Well.....

https://forums.moneysavingexpert.com/discussion/comment/79100750/#Comment_79100750

xylophone

I am sure they could have winged it and sold that one rather than completely ignoring wage increases.

A compromise was suggested and ignored.

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

xylophone

but the system (in an attempt to deliver certainty) uses autumn data to set the increase for next spring.

I'm not sure that it has anything to do with delivering certainty.

I cannot now find my reference but I recall an explanation for choosing September was to give time for pension books/family allowance books to be printed!

At all events, I know of at least one pension scheme  which sets May inflation figure as uprate reference and promptly pays the increase on 1 July.

And see

https://lordslibrary.parliament.uk/social-security-benefits-up-rating-order-2022-regret-motion/

The IFS has stated that it is an “opportune moment” for long-term reform of the way benefits are uprated. It said that instead of using the current “lagged measure of inflation”, an alternative would be to use:

near-term forecasts for inflation to attempt to increase benefits in line with the actual annual rate of inflation that applies at the point of increase. This is what is already done with the uprating of excise duties.

zagfles

QrizB said:

sevenhills said:

... but the government made a promise.

Politicians, political parties and governments make lots of promises, but only Parliament can do anything to hold them to it. And Parliament has chosen not to.

Nobody believes politicians' promises do they? Of any party? A few significant broken promises of the last couple of decades:

Triple lock - Tory 2019 manifesto

No NI increase - Tory manifesto 2019

£12 billion in welfare cuts - Tory manifesto 2015

Student loan threshold to increase with inflation - promise when the 2012 system was introduced (was temporarily broken)

Reduce/abolish student loans - Lib Dem manifesto 2010

No tax rate increases - Labour manifesto 2005

No student loan "top up" fees - Labour manifesto 2001

"I will not allow house prices get out of control" - Gordon Brown's 1997 budget before the biggest ever real terms increase in prices over the next decade

woolly_wombat

nigelbb said:

The long term aim is to ratchet up the real value of the new single tier pension as it is so low compared to other comparable countries. That's why there is the triple lock so the pension rises by at least 2.5% every year.

I think a more accurate description of the aim would be an attempt to divide the basic state pension plus SERPS/S2P pension cake more equitably, and put right an unwise past policy of breaking the link with average earnings that saw pension credit rise to a higher level than the basic state pension.

A friend of mine came to this country in their mid twenties and never earned very much, including many years of part time employment, but still surprisingly managed to accrue a state pension plus SERPS/S2P in excess of the ‘new’ ‘flat rate’ state pension because they were never opted out of SERPS.