"Average Earnings Growth" and triple lock

hugheskevi

Here are charts comparing the rate of Basic State Pension since 2001 and 2010 to what it would have been under different upratings, through to 2026 (assuming uprating of 4.8% in April 2026, which is subject to confirmation).

How earnings have fared relative to inflation depends on whether the comparator is RPI or CPI. Earnings growth has closely matched RPI over the last 25 years, with both earnings and RPI being noticeably higher than CPI.

A few interesting points:

• Since 2001, the State Pension is more than 33% higher than it would have been if uprated in line with CPI
• If Triple Lock had not been implemented, and State Pension has simply continued to be uprated by RPI (as it was before 2011, albeit with a lot of discretionary increases on top of RPI), the State Pension would now be almost the same as it actually is (it would be 0.4% lower now under RPI than it is under Triple Lock)
• Over the last 25 years, State Pension increases have been higher than any of RPI, earnings or CPI growth.
• Since 2010, State Pension is 14% higher now than if it had simply increased in line with earnings 

michaels

Phossy said:

Shouldn't the comparative baseline here be the cost of living. My sense is that wages have not kept up with the cost of living and have seen a fall in real terms over many years. Rather than focus on Welfare increasing above wages, I would have thought it was important that all rise in line with the cost of living. If wages were at an appropriate level then folks wouldn't need to work and need UC.

This is wrong.  WE do not want the situation where in a 30 year retirement pension income might go from 50% of average income to 25% if real wages increase by 2% pa (as used to be what happened).  You may not believe in 'relative' poverty but when it gets that extreme it can not be ignored.

BlackKnightMonty

The state pension was never designed to be a large and luxurious pension. It is a modest basic amount only. If you want a better retirement you need to make your own provisions in addition.

westv

BlackKnightMonty said:

The state pension was never designed to be a large and luxurious pension. It is a modest basic amount only. If you want a better retirement you need to make your own provisions in addition.

It's far from that now anyway.

Silvertabby

BlackKnightMonty said:

The state pension was never designed to be a large and luxurious pension. It is a modest basic amount only. If you want a better retirement you need to make your own provisions in addition.

That's what many people seem to have forgotten.  The Beveridge Report made it quite clear that the new (1948) State pension was just a safety net against poverty in retirement, and that anyone who wanted more would have to make their own provisions.  And his views on the payment of unemployment benefits for working age people makes for interesting reading..... publish this today, without identifying the source, and the odds are that it would be shouted down by the liberal left as the work of a 'nasty mean Tory'.

That said, society has moved on and living conditions that were pefectly acceptable in the 1940s would be grounds for Social Services action now.  Which is why the State pension and other benefits are now at above actual poverty levels (even though many people complain that they aren't).

 

Cobbler_tone

There is so much noise that I would not be at all surprised if something is changed on income tax/NI, i.e. breaking the promise. Not like a political party to break promises. 

1p on the basic rate, adjustments to the higher rates, balancing extra tax against lower NI. They are by far and away the simplest and most effective way of producing big numbers. None of which will be popular but I don't think any change that leaves most people worse off will be popular.

BlackKnightMonty

I think most working people want to see cuts in benefits to those not working.

MeteredOut

BlackKnightMonty said:

I think most working people want to see cuts in benefits to those not working.

I'd add "but able to work", and even then I'm not sure I'd agree "most working people" want that.

Or do you have some figures from a study/poll that shows that is the case?

Now if you asked people "do you want to see cuts in benefits to those not working otherwise your taxes will go up" then I think the positive answers would rise significantly.

QrizB

Silvertabby said:

BlackKnightMonty said:

The state pension was never designed to be a large and luxurious pension. It is a modest basic amount only. If you want a better retirement you need to make your own provisions in addition.

That's what many people seem to have forgotten.  The Beveridge Report made it quite clear that the new (1948) State pension was just a safety net against poverty in retirement, and that anyone who wanted more would have to make their own provisions. 

Per the Trust for London, the UK poverty line for 2022/23 (60% of median income after housing costs) is:

• Single person: £166/wk
• Couple: £287/wk
• Single parent, one child: £224/wk
• Couple, two children: £407/wk

As the poverty line is linked to income, rather than expenditure, there's some logic in "benefits intended to mitigate poverty" tracking earnings rather than CPI.

BlackKnightMonty

That’s fair.