It’s one of the most controversial elements of benefits and welfare in the UK – unless you’re receiving it every week, in which case it’s by far the most welcome.
But the state pension’s ‘Triple Lock’ is here to stay and is now forecast to add thousands of pounds more to pensioners’ incomes by 2030.
Both Labour and the Conservatives have pledged to maintain the Triple Lock in their manifestos, so whoever wins the general election, the cash for those retiring will keep going up every year.
Currently, the state pension is £11,502.40 per year, but some forecasts have suggested it could go up by another £1,600 by 2030.
One expert has pointed out that it’s quite a conservative (with a small ‘c’) estimate, and the real amount could be much higher still.
That’s because the Triple Lock is based on three elements: average earnings, Consumer Price Index Inflation rate, or a flat 2.5 percent.
The state pension MUST increase by whichever of these three is higher each year. This year, for example, the state pension increased a whopping 8.5 percent to £221.20 a week thanks to the high inflation rate last year.
And estimates looking at 2.5 percent gains between now and 2030 fail to take into account that wage growth and inflation are often higher than this.
One expert said: “The state pension WILL be worth AT LEAST £13,375 by April 2030 (if the triple lock is honoured), that’s just maths based on the 2.5% element. In all likelihood, it will be much more.
“Since the triple lock was introduced, the three elements have compounded at 3.1% (average earnings), 3.0% (CPI) and 2.5% (fixed 2.5%) per year. But picking whichever element is highest each year means the state pension has compounded at 4.0% per year (even despite post-Covid triple lock fiddles). Sustaining that same rate of increase, the state pension would be worth £14,600 by April 2030.”
Of course, pocketing the full amount per week is predicated on having a full National Insurance record. As Martin Lewis points out, you have one final chance to buy up to 13 missing years in your NI record this year, and add up to £79,000 to your state pension pot over your lifetime as a result.
