The new Chancellor Jeremy Hunt has refused to be drawn on whether the state pension will be uprated in line with the triple-lock.
October’s CPI is due to be published tomorrow and is expected to be around 10%.
The triple lock would mean that the state pension would rise in line with this figure, almost certain to be the highest of the three measures used for the triple-lock.
That would give retired people a hefty increase in their state pension but last year the triple-lock – which uprates state pensions in line with whichever is highest of 2.5%, CPI inflation and wages growth – was suspended.
Pensioners were instead given an increase of just 3.1%.
Speaking in the House of Commons following his reversal of the mini-Budget yesterday, the Chancellor said he would not be making “commitments on any individual policy areas” before adding “but every decision we take will be taken through the prism of what matters most to the most vulnerable.”
There’s no doubt that a Chancellor struggling to fill an estimated £40bn black hole in the government’s finances would be tempted to abandon or water down the triple-lock.
Especially as tomorrow’s inflation figures are expected to be in double figures and much higher than average earnings growth, which in August came in at 5.4%.
Choosing an earnings-linked increase instead could save the Treasury an estimated £4bn-£5bn a year. That’s based on Office for Budget Responsibility estimates which suggest that every 1 percentage point increase in the value of the state pension costs the Treasury somewhere in the region of £1bn.
But such a move would be controversial, especially with the many pensioners banking on a 10% or more increase, said Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown.
Ms Morrissey said: “The fact that the new Chancellor seems reluctant to confirm the triple-lock is concerning. State pension uprating is usually confirmed in November so there will be an anxious wait for many pensioners to see what they will get.”
Tom Selby, head of retirement policy at AJ Bell, said if the triple-lock was canned for a second year in a row, it would be hugely controversial and add to the political pressure being piled on the government.
Mr Selby said: “Clearly no politician wants to head towards a general election having applied a real-terms cut to pensioners’ incomes, and you would think Number 10 will be fighting hard against such a measure.”
