'Not sustainable!' Liz Truss under huge pressure to ditch state pension triple lock

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In 2023, more than £13.5billion will be added to the Government’s pensions bill that will see taxpayers having to take on an additional £24bn over the next two years because of the large series of increases expected. Liz Truss, who today was formally sworn in as the UK’s new Prime Minister by the Queen, has previously said she will stand by the mechanism. The state pension triple lock ensures annual increases in payments are made in line with the highest out of earnings growth, price inflation or 2.5 percent each year.

The state pension is set to surge past the £200 a week mark for the first time in April 2023 which will see millions of UK pensioners receiving a record financial injection as a result of current soaring inflation rates.

Pensioners will largely be protected from the raging cost of living crisis over the coming months as their state pension will provide them with an inflation-matched increase in income.

Britain finds itself in record inflation territory, with prices rising to 10.1 percent in July, and forecasts from several experts remaining in the double digits in September – the month used in the calculation.

Carl Emmerson, of research group the Institute of Fiscal Studies, warned: “The triple lock is expensive over the long run and therefore will need to be ditched at some point.

“CPI indexation of the state pension in April 2023 and April 2024 – which will be a big cash increase – is defensible.

“It is just a question of whether the resulting increase in the state pension as a share of earnings should be locked in permanently.

“This is clearly not sustainable, particularly amid the current economic downturn.”

Andrew Tully of pensions group Canada Life warned it is “economically challenging to maintain the triple lock” and that the Government will have to question its use of public finances.

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He added: “The Office for Budget Responsibility (OBR) has said previously that each percentage point on the state pension costs around £900million.

“So an 11 percent increase would cost the Government about £10billion, just for next year.

“It’s worth remembering the state pensions of today’s retirees are paid for from the tax receipts of today’s workers.

“The Government will have a tricky fiscal balancing act to ensure the state pension continues to be funded while promises of tax cuts are being bandied about.”

Jon Greer, head of retirement policy at wealth management firm Quilter, said: “Truss will struggle to balance the books if she wants to stay true to the Tory manifesto of keeping the triple lock in years to come in light of soaring inflation and her desire to not add any other taxes and slash existing ones.

“This ultimately will throw into question how the incoming social care reforms will also be funded.

“Something may have to give. Pensioners up and down the country will be hoping that it doesn’t start with the triple lock.”

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