State pension triple lock: Liz Truss faces ‘sizeable commitment’

Liz Truss becomes the next Prime Minister

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Ms Truss was elected today with a 57 percent share of the vote in the Tory leadership contest. She faces a gargantuan task of steering the British economy, as well as addressing key issues such as the rising cost of living and energy bills.

However, millions of pensioners will want to see the new Prime Minister directly address the matter of the triple lock.

The state pension triple lock sees the sum increase each year by whichever is the highest of: 2.5 percent, inflation or average earnings.

They were dealt a hammer blow this year, as the measure was deemed unaffordable and scrapped in favour of a double lock instead.

However, with a new Government to be in place this week, pensioners are hoping for a return to the triple lock.

What many do not want to see is the measure being scrapped altogether, as some experts have recently suggested could happen due to spiralling costs.

The matter remains contentious but will have to be addressed promptly by Ms Truss.

Jenny Holt, Managing Director for Customer Savings and Investments at Standard Life, said: “The rationale for this year’s downgrade was that distortions to earnings during the pandemic would have given pensioners a bumper increase at a time when many people of working age had seen their earnings reduce during the pandemic.

“Now, however, pensioners can expect an increase of around 10 percent next year, with September’s inflation figure set to determine the increase in payments.

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“If this comes to pass, we’ll see the new state pension valued at more than £10,000 a year for the first time.”

Of course, recommitting to the triple lock is no mean feat, particularly due to the cost of the policy.

It is this which has proved a sticking point for some experts, who have debated whether the policy will take a front seat.

Ms Holt continued: “The state pension currently costs the government around £100billion a year.

“A 10 percent increase will be equivalent to around £10billion, making it a sizeable commitment.”

However, pensioners are likely to be buoyed by the fact Ms Truss has previously signalled her support for the triple lock.

Throughout the campaign, the hopeful Prime Minister signalled she would reintroduce the policy if she were to become the leader of the party.

Speaking at the Tory leadership hustings in Perth, Ms Truss said: “I won’t fudge the figures. I’m fully committed to the triple lock, which gives the highest rate.”

If the triple lock were to be reintroduced, it could create a double-digit percentage boost for pensioners.

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Tom Selby, head of retirement policy at AJ Bell, explained: “Assuming Liz Truss sticks to her guns and the triple-lock remains in place, retirees could receive a huge boost to their incomes next year.

“September’s inflation figure will be the one to look out for, with the Bank of England predicting a peak at 13 percent at some point later this year.

“If it were to hit 13 percent for September, the basic state pension would rise by £18.45 to £160.30 per week (£8,335.60 per year) in April 2023.

“The new state pension would increase by £24.10 to £209.25 per week (£10,881 per year).”

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