Is the Triple Lock State Pension Still in Place? (2023/2024)

The UK's pension landscape has seen a myriad of changes over the years, but one steadfast component that has weathered the storms of economic change is the renowned triple lock mechanism. But, is the triple lock state pension still in place for the upcoming 2023/24 tax year?

This insight delves into this critical query, outlining the implications of this policy for UK pensioners.

Key Takeaways

• The triple lock state pension is still in place for the upcoming 2023/24 tax year, providing a record-breaking 10.1% increase in the state pension.
• The triple lock mechanism, introduced in 2010, ensures the state pension aligns with inflation, average wage growth, and a minimum increase of 2.5% annually.
• The triple lock was temporarily suspended in 2022/23 due to the financial impact of the COVID-19 pandemic but has been reinstated for 2023/24.
• The reinstatement of the triple lock will have significant implications, including increased weekly amounts for pensioners and ensuring the value of the pension keeps pace with the rising cost of living for future pensioners.

Is the Triple Lock State Pension Still in Place?

Yes, the triple lock state pension is still in place. It was reinstated for the 2023/24 tax year, leading to a record-breaking 10.1% increase in the state pension. This increase will benefit pensioners, with additional weekly amounts of £19 for the full new state pension and £14 for the full basic state pension.

The triple lock state pension mechanism is an essential feature of the UK's state pension policy. Introduced by the coalition government in 2010, its primary objective is to ensure that the value of the state pension aligns with the fluctuating economic conditions. It's crucial to consider how the potential changes to the triple lock could impact your retirement planning. Here's how it works:

The Three Pillars of the Triple Lock

The "triple" in the triple lock denotes the three measures determining the annual increase in the state pension. These are:

1. Inflation, as per the Consumer Price Index (CPI) of the previous September.
2. The average wage growth for the year.
3. A minimum increase of 2.5%.

The Triple Lock's Role in Protecting Pension Value

Since its induction, the triple lock has served as a protective shield for the state pension, ensuring its annual rise in line with inflation and wage growth across the UK. Despite being a government policy for over a decade, it hasn't been all plain sailing for this financial mechanism.

The Triple Lock Suspension in 2021/22

In 2021, the financial aftermath of the Covid-19 pandemic led to an artificial surge in average wages as millions of British citizens returned to work after being on furlough. According to the Office for National Statistics, the wages increased by a staggering 8.8%.

This sudden increase would have led to an 8.8% rise in the state pension for 2022/23. However, with the UK government grappling with the cost of pandemic support, it made a decision to suspend the triple lock for the 2022/23 tax year. As the BBC reports, the furlough scheme alone cost the government an enormous £70 billion.

Consequently, the state pension was subjected to a "double lock" for 2022/23, leading to an increase only in line with the CPI, which stood at 3.1%.

The Return of the Triple Lock in 2023/24: A Major Boost

During the build-up to the autumn statement, there were anticipations that the triple lock would be suspended for a second year. However, the government surprised many by confirming the reinstatement of the triple lock for the 2023/24 tax year.

The Implications of the Triple Lock's Return

The reinstatement of the triple lock in 2023/24 has significant implications for the state pension, which will now rise in line with September's CPI figure, leading to a record-breaking 10.1% increase. This unprecedented boost will result in:

1. An increase in the full new flat-rate state pension to £203.85 per week from £185.15 for those who reached pension age after April 2016.
2. An increase in the full basic state pension to £156.20 per week from £141.85 for those who reached pension age before April 2016.

What Does This Mean for UK Pensioners?

This considerable increase in the state pension can have profound implications for pensioners' financial stability.

Impact on the Full New State Pension

For those on the full new state pension, this 10.1% increase will translate into an additional £19 per week, accumulating to an extra £988 over a year.

Impact on the Full Basic State Pension

For those on the full basic pension, the increase will result in an additional £14 per week, which totals £728 over a calendar year.

Implications for Future Pensioners

Even if you're yet to reach the state pension age, you'll still benefit from this significant increase in 2023, as it will be incorporated into future years, ensuring that the value of the pension keeps pace with the rising cost of living.

Previous State Pension Triple Lock Increases

The graph below shows the previous state pension increases as per their relevant measure:

Seeking Professional Advice

With such significant changes in the state pension, it may be beneficial to seek professional advice. If you wish to discuss how the honouring of the triple lock could influence your finances, complete the Sunny Fact Find for retirement advice. The answers you provide help us to find the best-suited adviser for your needs. Your adviser contacts you to explain how they can help, you decide how to proceed.

Concluding Thoughts

Is the triple lock state pension still in place? Yes, it is, and its return in 2023/24 is a welcome move for UK pensioners. The significant increase in the state pension will not only help in managing the escalating cost of living but also provide a financial safety net for many.