What is the pension triple lock and could it be scrapped?

Liz Truss has seemingly overruled her new chancellor after telling MPs that the triple lock on pensions is being protected.

On Monday, new chancellor Jeremy Hunt failed to guarantee he would maintain the triple lock and said decisions would be taken “through the prism of what matters” to the most vulnerable.

But during an appearance at PMQs on Wednesday, the prime minister insisted that “we are protecting the triple lock on pensions”.

Following the confirmation in the House of Commons, the PM’s official spokesman said the decision reflected the “unique position” of pensioners who are unable to increase their income through work.

“Our priority… is to protect the most vulnerable. That includes those who cannot increase their earnings through work, such as pensioners. They are in a unique position,” the spokesman said.

“She and the chancellor have discussed and agreed the position the prime minister set out this morning.”

As recently as 2 October, Truss said state pensions would increase in April by whichever is highest – 2.5%, wages or inflation.

But there had been fears it would be scrapped since Truss replaced Kwasi Kwarteng following the government's disastrous mini-budget.

A Number 10 spokesman previously said: “The prime minister and the chancellor are not making any commitments on individual policy areas at this point, but as I say the decisions will be made through the prism of what matters most to the most vulnerable.”

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What is the pension triple lock?

The pension triple lock is a government guarantee that state pensions grow each year in line with whichever is highest out of earnings, inflation or 2.5%.

In the current climate, this would mean pensions rising in line with the inflation rate in April next year.

The consumer price index (CPI) inflation for August stood at 9.9% and is predicted to increase to 10% in September. Average earnings rose by 5.4% year on year, the latest figures show.

The triple lock was introduced by the Conservative and Liberal Democrat coalition government in 2010 to give pensioners a minimum level of income which would keep pace with growth in workers’ earnings.

The state pension is for people who reached 66 years old before 6 April 2016, and has two tiers.

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The basic state pension is based on a person’s National Insurance contribution record and the additional state pension is partly earnings-related.

Future pensioners from 6 April 2016 will receive the new state pension.

Helen Morrissey, Hargreaves Lansdown senior pensions and retirement analyst, called Hunt’s refusal to commit to the triple lock “concerning”.

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She told Pensions Age Magazine: "There will be many pensioners banking on this increase, especially after last year’s increase of just 3.1% was rapidly swallowed up by rising inflation leaving many people struggling to cope.

"We’ve already had far too much uncertainty about whether the triple lock would be applied. State pension uprating is usually confirmed in November so there will be an anxious wait for many pensioners to see what they will get.”