Pensioners could be left £760m worse off over Rishi Sunak decision

19 October 2023 , 18:44

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'Pensioners need to be rewarded for their decades of contributing to our society' (Image: Getty Images)

Older people could be left over £760million worse off if Rishi Sunak's government tweaks the way state pension payments are calculated, according to a new analysis.

The benefit for 12 million pensioners across the country is due to rise by 8.5% in April under the triple lock policy. The commitment - a Tory manifesto pledge - typically means the state pension increases in line with whichever is highest out of average wage growth, inflation or 2.5%.

Wages are currently outstripping inflation, at 8.5%, but this figure also includes one-off bonuses to NHS staff and other public sector workers. Reports have suggested the Chancellor Jeremy Hunt is considering excluding the bonuses in an attempt to save the Treasury millions ahead of the Autumn Statement.

According to an analysis by the Liberal Democrats, this could reduce the award to 7.8% and amount to a cut of £762million for older people next April. Wendy Chamberlain, the party's Work and Pensions spokeswoman, said: "To row back on the triple lock would be another in a long list of callous Conservative party broken promises.

"Pensioners need to be rewarded for their decades of contributing to our society, not be forced to suffer this Conservative government turning their back on them once again, right in the midst of a cost of living crisis. She added: "The triple lock must be maintained and pensioners must be given the money that they deserve after their years of service. Instead, this out of touch Prime Minister looks set to punish them for his own party crashing the economy."

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Earlier this week No10 refused to guarantee that the triple lock for pensions would be based on earnings including bonuses. The Prime Minister's official spokesman said: "The Secretary of State has to conduct his statutory annual review of benefits and state pensions using the most recent data, including, obviously, today's figures. So that process will take place."

A separate analysis this week also found watering down the triple lock could leave each retiree at risk of being £74-per-year worse off. Industry experts Aegon say if these payments are discounted, the state pension would rise by £826.82 to £11,427.02 a year, instead of £11,501.22 – a difference of £74.20.

The old rate, for those who reached state pension age before April 2016, would rise by £633.55 to £8,744.95, instead of by £690.40 to £8,812.80 – £67.85 less. The Department for Work and Pensions said earlier this week the Government is "committed to the triple lock", adding: "The Secretary of State will conduct his statutory annual review using the most recent data available".

It also follows warnings that families on Universal Credit face losing up to £1,200 as the Tories threaten to not increase benefits in line with rising prices. Government ministers have cast doubt on whether payments would go up in April next year - despite warnings many will face a "heavy price". Treasury minister Andrew Griffith said on Wednesday the decision is "yet to happen" and "no promises" could be made on spending and taxes ahead of the Autumn Statement.

Ashley Cowburn