- Conservatives and Labor likely to pledge support for triple lock
- Figures suggest this would mean a triple lock in excess of £13,000 by 2030.
- From April, the state pension will rise by 8.5% to £11,502 a year
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The annual state pension could exceed £13,000 a year by 2030 if the current triple pension lock is maintained, analysis claims.
Both the Conservative and Labor parties are expected to pledge their support for the triple lock on pensions in their manifestos for the next general election, according to media reports.
Under the triple lock, pensions could reach £13,236.10 in 2023 and will exceed £12,000 in 2026/2027, according to research from investment platform AJ Bell.
The state pension is expected to exceed £13,000 by 2030, but more pensioners will have to pay income tax if the personal allowance of £12,570 is not increased by then.
However, a Mail on Sunday analysis warns that pensioners could be dragged into the lowest tax bracket from 2027, even if the state pension is their only income.
The warning comes after Chancellor Jeremy Hunt confirmed that the Government will maintain the tax-free personal allowance of £12,570 until 2028.
The triple lock, introduced by the coalition government in 2011, ensures that the value of the state pension is not exceeded by the cost of living or income growth of the working population.
This means that the state pension will increase according to further growth in average earnings, inflation or 2.5 per cent per year.
Tom Selby, director of public policy at AJ Bell, said: “Pensioners will no doubt be pleased that both main parties appear willing to recommit to the ‘triple lock’ on state pensions by the next Parliament, with the commitment bathed in gold which could boost the The value of the state pension will exceed £13,000 a year by the end of this decade.
“Given how critical older people’s votes are to winning a general election, it is no surprise that both the Conservatives and Labor appear to be taking a safety-net approach to the triple lock,” Selby said.
“Politics has become a totem for ‘doing the right thing by pensioners’, and debate over the state pension is often limited solely to politicians’ commitment to increasing the benefit at the highest level between growth average income, inflation or 2.5 percent.
Both Labor and the Conservatives plan to maintain the triple lock on pensions in their upcoming election manifestos.
From April, the state pension will rise by 8.5 per cent to £11,502 a year, or £221.20 a week, under the new flat rate, while those who retired before 2016 will see their pension rise to £ 169.50 per week.
However, people on the basic rate also receive top-ups, called S2P or Serps, if they got them earlier in life.
Currently, the state payment is £10,600, or £203.85 for those who retired after 2016, while those who reached state pension age before April 2016 get £156.20 a week.
According to AJ Bell, the decision to maintain the triple lock provides relative political security in the short term, but could lead to “intergenerational injustice” if the planned increases in the retirement age are accelerated.
Selby said: “While the policy is understandably popular, it remains aimless, with neither major party clearly indicating how much they think the state pension should be worth.”
‘The next government needs to set out a clear plan for the state pension, both in terms of what its “fair” value is, perhaps as a proportion of average earnings, and the average length of time retirees should receive it. ‘
‘For this necessary reform to take place, politicians will have to show courage and go beyond the current “Will they? Won’t they?” debate on the triple lock,” Selby added.
“The state pension remains the foundation on which people’s retirement plans are built, so building at least some certainty into the system is crucial to helping Britons plan with confidence.”