Costly policy thrown out of kilter by Covid

MINISTERS introduced the pension triple lock to guarantee a decent rise in state payments every year.

The annual increase is pegged to average earnings and inflation, going up by whichever is greatest.

But there is also a floor of 2.5 per cent to make sure pensioners are protected if the other measures drop too low.

The guarantee was introduced by the coalition and the Conservative governments that followed have stuck with it.

But the policy is incredibly costly and the Treasury is facing unprecedented costs from the pandemic.

Coronavirus has also thrown the triple lock formula out of kilter.

Official figures released last

week showed average earnings between February and April went up by 5.6 per cent because they are measured against the same period last year, right at the start of the crisis.

The Treasury bases its uprating on earnings figures later in the year and the inflation rate in September and it points out that it it is too early to say what they will be.

A rise at such a high level would cost £4billion and come at a time when many working age adults are still struggling after job losses caused by the pandemic.

But campaigners warn that British pensioners still fare worse than their counterparts in other wealthy nations and must not be left to pay the price.

Many rely on the pension for basic needs and have no other way of raising money once they are retired.