Triple lock increase for April 2027 is 3.9% (probably)

MacMickster

https://forums.moneysavingexpert.com/discussion/comment/82156442#Comment_82156442

Really? I thought that it sounded awfully like common sense.

The triple lock created a situation where the state pension would keep on increasing by more than inflation and more than wages ad infinitum if it wasn't scrapped at some time You would eventually end up with all state pensioners being taxed at higher rates of tax.

On this board people talk about planning their finances for their retirement. If anyone was banking on the triple lock continuing up to and throughout their retirement then they would be making a big mistake, so someone pointing out that the country couldn't afford that to happen isn't political. It is simply making sure that they don't use faulty logic in their pension planning.

GunJack

Good point about planning for the triple lock not lasting. In my spreadsheet I've got a straight 2.5 pct going forward for SP increases, but the real figure is put in when available. If it looks like CPI is getting lower, i.e. towards the BoE target of 2 pct, then I'll drop the 2.5 to 2.

chuffinnora

I've done something similar but did actually use 2%. I've been amending to the real figures as I go along.

If its higher which generally it is, I just increase my drawdown figures rather than making it last longer.

mrklaw

I just assumed 0% real. so trackign with whatever I’m using for inflation in my modelling. I assume most were actually ignoring the triple part as its hard enough for the ONS or government to estimate into the future let alone us lot with our spreadsheets.

GunJack

Its a double effect in my spreadsheet as I have a deferred Civil Service pension to come which only rises at CPI so same increase on 2 parts of my pension income when I get there. The third element is harder to track as it rises by CPI (max 5pct) plus 1pct in deferrement whilst still working for the company (current), dropping to CPI only while deferred but not working for them (from retirement at 61 to NRD of 65), to RPIH when in payment....very hard to predict where that part will end up!!

Veloflyer

https://forums.moneysavingexpert.com/discussion/comment/82156462#Comment_82156462

I'd agree, but what has politics got to do with common sense? Triple lock and much else is simply down to whether the ruling party think there is/will be more or less votes for them. Practically everything else - including common sense, financial credibility, accountability etc. is just noise.

FactualFinance

The Triple Lock is a means to ensure that pensioners maintain a standard of living and purchasing power broadly in line with other earners in the UK. The only questionable aspect is the 2.5% default if the other 2 variables are lower: this results in pensions going up MORE than other earners, which is unfair and it is easy to argue that that this aspect should be ditched. However, to ditch the earnings link is - as has been said by other parties - is arguably morally wrong: this would lower the quality of life of all pensioners in most years, by a significant amount over a few years.

zagfles

https://forums.moneysavingexpert.com/discussion/comment/82158100#Comment_82158100

A CPI/earnings double lock would still increase the state pension above both earnings and inflation over the long term due to the lumpy nature of year by year increases. For instance if this year earnings go up 4% and inflation 2%, and next year earnings go up 2% and inflation 4%, the state pension will go up about 8% over the 2 years while both earnings and inflation have only gone up about 6%.

Watch Martin's video. If he's right about the plans, they sound very sensible.

Martin Lewis: State Pension 'triple lock’ – what's REALLY happening

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82157751#Comment_82157751

I'd agree, but what has politics got to do with common sense? Triple lock and much else is simply down to whether the ruling party think there is/will be more or less votes for them

As Winston Churchill once said ' Democracy is the worst form of Government, apart from all the other ones'

mrklaw

https://forums.moneysavingexpert.com/discussion/comment/82157886#Comment_82157886

it was either a means to accelerate pension earnings as it had lagged behind earnings - in which case it did a good job but didn’t have an end point defined; or it was a means to follow earnings - in which case it failed (in pensioners’ favour). Earnings and inflation don’t go up at the same time, but the triple lock meant that the pension went up every time either was high so it went up faster than either many times.

the new approach is still ‘triple’ - they mentioned an earnings measure. so there may be temporary periods where it goes above earnings but will then ease back to parity (at a certain %). the IFS recently did a video on this and they illustrate it quite nicely.