State Pensions could see a drop in value by April of next year as Liz Truss continues to make changes to the country's finances.
The pressure is on for the new Prime Minister to do the right thing to make the dire financial situation in the UK a bit better. Just weeks ago Truss was promising the state pension would rise by the triple lock - also pushing it up by 10.1%.
But the PM is now thought to be looking at whether to raise pension payments by earnings instead - which is only 5.5%. The move would deprive pensioners - of which there are 12.3million - £443 a year if they're on the New State Pension, reported The Mirror.
READ MORE: State Pension change means pensioners will miss out on free benefits
Campaigners and some Tory MPs are furious. A Tory MP said: “It is like she has a zero-voters strategy” – referring to the zero-Covid approach some nations pursued in the pandemic.
Former Tory health minister Maria Caulfield said: “I will not be voting to end the pensions triple lock.” Serving Cabinet Office Minister Brendan Clarke-Smith added: “The triple lock was a manifesto commitment.”
However, today during PM Questions, Truss has insisted she is "completely committed" to the triple lock on state pensions just a day after Downing Street triggered a backlash by indicating it could be ditched. She told Prime Minister's Questions: "We've been clear in our manifesto that we will maintain the triple lock and I'm completely committed to it - so is the Chancellor."
But Truss's subsequent firm commitment to maintaining the policy appears to be designed to head off increased Conservative anger. The Chancellor is expected to set out his plans for pensions and benefits in his October 31 statement.
How much will benefits and pensions rise by in April 2023?
Normally, benefits rise every April by what inflation was the previous September - a figure today confirmed as 10.1%. Likewise, the state pension rises by the triple lock - the highest of earnings, 2.5%, or inflation. That'd mean pensions rise 10.1% too.
But according to reports, Liz Truss has looked at raising both benefits and the state pension by the rise in average earnings instead. If she did this, it would be a 5.5% rise - the rise in average total earnings in the year to May-July 2022.
Therefore, benefits would still technically rise. But the rise would be swallowed up by soaring prices, making it a cut in real-terms.
According to Hargreaves Lansdown, if pensions rise by earnings instead of inflation, it would take the full flat-rate New State Pension from £185.15 a week to £195.35 per week. The Mirror suggested that's about £8.50 a week (£443 a year) less than it would be if it rose with inflation.
The basic Old State Pension would rise from £141.85 to £149.65 per week. The Mirror suggested that's about £6.55 a week (£340 a year) less than it would be if it rose with inflation.
What is the pension triple lock?
First introduced by the Conservative and Liberal Democrat coalition government in 2010, the pension triple lock is a government guarantee that state pensions grow each year in line with whichever is highest out of earnings, inflation - as measured by the Consumer Prices Index (CPI) - or 2.5%.
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