Recently released figures show that the expected £655 pay rise in April 2025 is unlikely to happen. Instead, people can now expect £11.50 less per month than originally anticipated. Under the triple lock, the UK state pension increases each year by the highest of inflation, earnings, or 2.5%.
Triple Lock Pension Cuts Leave Millions with 11.50 Pounds Less Each Month
Labour leader Keir Starmer has promised to keep the extremely popular boost mechanism in place for the duration of the current Parliament’s five-year term, as reported by the Express.
The triple lock has been heavily critisized in recent years for giving state pensioners two large rises in a row.
In April 2023, they were given 10.1% based on inflation, while this April they received 8.5%, in line with earnings growth. This assisted millions cope with the cost-of-living crisis and softened the impact from previous PM Rishi Sunak’s contested move of halting the triple lock in 2021.
Each year’s triple lock hike is based on consumer price inflation from September the previous year and earnings growth over three months from May to July.
Inflation is currently around 2%, but earnings rose at a faster rate of 5.7% in the three months to May this year.
The higher earnings figure is expected to apply when the 2025 increase is set. However, earnings for the three months to June have dropped sharply to 4.5%, which is a significant hit, especially if it continues in July.
This would mean that millions of people receiving the new state pension would receive £138 less than they had expected. That equates to £11.50 per month in income loss.
Pensioners Hit by Lower Triple Lock Increase and Winter Fuel Payment Cuts
Helen Morrissey, Hargreaves Lansdown’s head of retirement analysis, stated in June last year that NHS employees received large one-time bonuses.
Because they are not receiving them this June, the month’s wage growth figure decreased.
Morrissey said retirees will still enjoy the increase, but warned that “with many still reeling from the news that their winter fuel payment is to be taken away, it won’t be quite the boost they hoped for.”
According to Aegon pensions head Steven Cameron, this is a second hit for seniors after Labour chancellor Rachel Reeves’ decision to cut the winter fuel payment.
“This will be a disappointment to state pensioners who might otherwise have received a higher increase.”
Cameron warned that in real terms, pensioners will be no better off by £517. “Any increase in ‘real’ terms will be significantly dented by the loss of their winter fuel allowance.”
