Pensioners warn ministers of pressure to scrap triple-lock pensions | Retirement | Finance

Jonathan Ashworth calls for the return of the triple pension lock

Chancellor Rishi Sunak defended the expected 10% hike and insisted it would not fuel an inflationary spiral.

The Chancellor has come under pressure not to abandon the triple lock again (Image: GETTY)

But critics said the move was “ridiculous” and “crazy” as wages are well below the cost of living and the government calls for wage moderation.

Silver Voices director Dennis Reed warned he fears the row could pit workers against pensioners and lead to pressure for the triple lockdown to be suspended again.

He said pensioners waiting for an extra £1,000 were a long way off as millions of older claimants are still in the lower-paid old system, which would mean a 10 per cent increase equivalent to an extra £14 a year. week.

The new state basic pension, available to those retiring after April 6, 2016, is paid at a higher rate of £185.15.

Mr Reed said: ‘If the triple lockdown is dropped again, hell will have no fury like the wrath of the elderly.

He warned that the row over pension increases at a time of wage moderation gives the government a “quick excuse” to drop the increase closer to the time.

Mr Reed warned that the anger directed at the government last year when the triple lockdown was suspended was “minor” compared to the “major attack” it would face if it started again.

The formula means that pensions increase at the higher of inflation, wage growth or 2.5%

It was suspended ahead of this year’s increase after the pandemic skewed the numbers.

The increase in pensions next April will be determined by the rate of inflation in September, which is currently expected to be around 10%.

This has led to claims that it is unfair for young workers to be asked to suffer pay cuts while retirees are waiting for a significant raise.

Downing Street yesterday insisted it would be ‘unwise’ to raise public sector wages in line with inflation.

The prime minister’s official spokesman warned of ‘inflation hunting’ which could have a ‘bigger impact’ on take home pay in the long run.

Mr Sunak argued that public pensions will not have the same impact on inflation.

The Chancellor said the triple lockdown protects pensioners ‘because they are among the most vulnerable in our society’.

He added: “It is right that we reward our hard-working public sector workers with a pay rise, but this must be proportionate and balanced with the need not to add to inflationary pressures and also to see what is affordable. for the taxpayer.

“The slight difference with pensions is that pensions are not entry costs into the cost of producing the goods and services we all consume, so they don’t add to inflation in the same way.”

Former Treasury minister Lord O’Neill, who served under David Cameron and Theresa May, has denounced plans to restore the triple lockdown.

Lord O'Neill

Lord O’Neill not a fan of restoring triple lockdown (Picture: Wikipedia)

He said: “Given the strain on fiscal policy and the inequality issues of the last decade and beyond, the constant protection of pensioners seems ridiculous in itself and in these particularly insane circumstances.”

Len Shackleton, a labor market expert at free market think tank the Institute of Economic Affairs, said the money earmarked for the pension hike would be better targeted elsewhere.

He said: “It’s hard to call for wage moderation among the working-age population when pensioners are getting a big raise.

“It may be politically difficult to waive the triple lockdown again, but we should bear in mind that pensioners as a group are less likely to be in poverty than, for example, families with young children.

“Support for struggling households might be better targeted than giving a big raise to all retirees, many of whom are relatively well-off.”

Older retirees often face much higher heating costs than workers away from home for most of the day.

Work and Pensions Secretary Therese Coffey said the government had focused on helping low- and fixed-income households.

“We are aware that energy bills are increasing and we do not want a pensioner to find themselves in a situation where they are afraid to pay their heating bill.”

Lord Foulkes, co-chair of the All-Party Parliamentary Group for Older People, said: “There are spoilers trying to spark an intergenerational struggle between poor pensioners and poor families.

“This must be resisted as both groups struggle to make ends meet while the rich get richer by the day.

“Older people have already lost without a triple lockdown this year and must not be forced into further misery and even destitution in the worst cases.

“It is also nonsense to try to claim this will fuel inflation as they urgently need the increase to help pay for food and fuel to keep warm and survive and will continue to buy the own brands cheapest available whenever possible.”

Caroline Abrahams, Charity Director at Age UK, said: “Millions of older people, like many others across the UK, are currently facing a huge financial struggle, unable to pay their basic bills and dreading what which promises to be very difficult winter to come.

“With prices rising at their fastest pace in 40 years – in addition to the suspension of the triple lockdown last year – it is more important than ever that the state pension is increased in line with inflation l ‘next year.

“For many older people living on low fixed incomes, relying solely on their pensions and state benefits, there are simply no more cuts to be made – without the safety net of the triple lockdown, millions vulnerable elderly people could fall into deep difficulties from which they may never recover.

Deputy Prime Minister Dominic Raab said pensioners were “particularly vulnerable and are disproportionately affected” by rising energy costs.