State Pension fury: Sunak told to ditch triple lock and deny savers ‘several billions’ | Personal Finance | Finance

Mr Johnson is expected to break two manifesto pledges this week in what could be a politically divisive move. The Prime Minister is facing criticism from cabinet ministers and Tory MPs for his plans to increase national insurance by a percentage point, raising £13 billion to overhaul social care and address NHS waiting lists. It has also been reported, however, that Mr Johnson and his Chancellor of the Exchequer, Mr Sunak, could abandon the pension triple lock.

The lock commits the Government to increasing the state pension in line with 2.5 percent, inflation or the rise in wages, whichever is highest.

The end of the furlough scheme has led to an artificial increase in wages of 8.8 per cent as the economy reopens, meaning the government would have to fund an extra £5billion in state pension rises if the policy remains.

Last month, former pensions minister Steve Webb said such growth would increase the state pension from £9,340 to over £10,000 a year.

He told the Independent that the figures will “pile pressure on the Chancellor, as he will want to stick to his triple lock policy, but not pay a huge increase to pensioners.”

Mr Webb said the most likely option for the Chancellor was to look for a measure of earnings growth which “strips out” the effect of the pandemic.

He suggested using a measure of “underlying” earnings growth, knocking between 2.4 per cent and 3.8 percent off the headline figures.

“This could save the Chancellor several billion pounds a year whilst still allowing him to claim he had kept to the ‘spirit’ of the triple lock promise.”

Pension expert Steve Cameron also told last month that the “stripping out” of the effects of the pandemic is an option for Mr Johnson and Mr Sunak.

He also said the Government will probably have to at least partially break its 2019 manifesto pledge to maintain the triple lock.

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Julian Jessop, an economist with the free-market think tank, the Institute of Economic Affairs, said each percentage point increase in earnings growth will add about £900million to annual spending on state pensions.

He suggested that an increase of eight-nine percent is “hard to justify”.

Mr Jessop added: “The pay data have been distorted by the pandemic in ways that no one could have anticipated.

“Unless the triple lock is changed, this will provide an unintended windfall to pensioners that is increasingly hard to justify.”

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