The Chancellor, Jeremy Hunt, has committed to maintaining the triple lock system for state pension increases if the Conservatives win the next general election.
The triple lock guarantees that pensions rise by the highest of average earnings growth, inflation, or 2.5%. This pledge comes despite the system's high costs, with Hunt expressing confidence in funding it through economic growth. Labour also supports retaining the triple lock.
The state pension, received by over 12 million UK individuals, is set to rise by 8.5% in April. This adjustment will increase the weekly payments to £221.20 for the new flat-rate pension and £169.50 for the old basic state pension.
This change follows a 10.1% increase in April 2023, reflecting efforts to help pensioners keep up with rising costs or wage growth in the wider population. Introduced in 2010, the triple lock's sustainability has been debated due to its financial implications.
Inflation has decreased to 3.4%, the lowest since September 2021, with expectations it will soon drop below the Bank of England's (BoE) 2% target. Meanwhile, the state pension's annual cost has risen, reaching an estimated £124 billion for 2023-2024.
With inflation previously high, the BoE has raised interest rates to 5.25%, indicating possible rate cuts later this year, impacting borrowing costs and savings returns.
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