Guaranteed ... state pension rise of 2.5%
A BILL in Parliament will today avert a state pension freeze next year and fulfil the Government’s triple- lock election pledge.
A slump in earnings this summer due to the coronavirus crisis would otherwise lead to a zero rise in pension payments from next April.
Work and Pensions Secretary Therese Coffey will introduce a technical Bill to allow for a pension rise of at least 2.5 per cent.
She said yesterday: “The Government has worked hard to protect all age groups during the pandemic, strengthening the welfare safety net, introducing furlough and income protection schemes, as well as supporting those who have lost their jobs back into work. It is only right, then, that we also ensure pensioners can see their incomes protected as we build back better.
“In these difficult times, I want to give pensioners peace of mind about their financial health.”
Under the Government’s triple- lock pledge, the state pension rises each year by the highest increase out of average earnings, consumer prices or a minimum of 2.5 per cent.
Current Whitehall rules peg the pension rise each April to average earnings in the period between May and July in the previous year.
But officials expect a slight fall in average wage growth during the three- month period this year.
Office for National Statistics data showed average weekly earnings fell by 1.2 per cent during May. It would mean a pension freeze unless the law is changed to ensure inflation or the minimum 2.5 per cent figure is used instead.
Ms Coffey’s Social Security ( Up- Rating of Benefits) Bill is designed to ensure the Government can stick to the triple- lock pledge.
Her move comes in spite of speculation that the pension triple- lock could be temporarily suspended or even scrapped to help the Treasury claw back cash after more than £ 190billion was spent on emergency pandemic measures, sending this year’s Treasury deficit soaring to about £ 350billion.
Chancellor Rishi Sunak is understood to be pressing Prime Minister Boris Johnson to let him abandon the Tory manifesto in his next Budget.