The reason why both earnings growth and inflation matter for the state pension is the pensions 'triple lock'. In place since 2011 (except for a one-year temporary suspension in 2022), under the triple lock the state pension rises in line with the...
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The reason why both earnings growth and inflation matter for the state pension is the pensions 'triple lock'. In place since 2011 (except for a one-year temporary suspension in 2022), under the triple lock the state pension rises in line with the highest of CPI inflation, average earnings growth or 2.5%. In this report, we first discuss how the triple lock has led to an increased level of the state pension, thereby increasing state financial support to pensioners at an increased cost to the government, over the last 13 years. We then present new analysis showing how the peculiar nature of the policy creates uncertainty around the level of the state pension for both current and future generations of pensioners. We also provide a concluding discussion.
