Aegon: House of Lords defeats the government in voting to maintain the earnings element of the state pension triple lock

Photo of Steven Cameron
Steven Cameron, Pensions Director at Aegon.

The House of Lords has defeated the government in voting to maintain the earnings element of the state pension triple lock. Baroness Ros Altmann proposed the amendment to the social security legislation that sought to overturn a government decision to suspend the triple lock for one year, replacing it with a less generous ‘double lock’ and meaning the state pension would rise by September’s CPI rate of 3.1%. The legislation will now go back to a vote in the House of Commons.

Steven Cameron, Pensions Director at Aegon, comments:

“Most would agree maintaining the state pension triple lock in its unadjusted form would fail the test of intergenerational fairness, granting pensioners an unrealistic increase of over 8% resulting from distortions in earnings growth figures during the pandemic. But during a period of economic volatility and inflation expected to average 4% over the coming year, it’s becoming increasingly clear that the government may have been too hasty to pull the trigger on the triple lock entirely.

“With the earnings distortions evident over the spring and early summer, we alongside many pensions experts offered suggestions for a fairer approach, allowing the government to keep its manifesto commitment of maintaining the spirit of the triple lock while ensuring pensioners aren’t left out in the cold. These include smoothing out increases in earnings over a two or three year period or basing the increase on an earnings growth figure calculated by the official statisticians with the pandemic distortions stripped out.

“While 8.3% continues to look extremely generous, 3.1% is now looking harsh against the broad acceptance we’ll see sharp winter rises in the cost of living as well as in heating costs which disproportionately affect pensioners. The vote on the triple lock will now go back to the government where MPs may now be persuaded to look again at a fairer middle ground.”

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