Pensioners are set to get a major boost to their income in 2023 after the UK Government confirmed the return of the pension triple lock.
Department for Work and Pensions (DWP) Secretary Therese Coffey made the announcement on Monday (21 March), with the Chancellor Rishi Sunak expected to confirm it in his Spring Statement 2022 on Wednesday (23 March).
It comes after the policy was temporarily suspended by the Boris Johnson administration in 2021 as a result of the Covid pandemic.
So what is the triple lock - and how much more money will pensioners get?
Here’s everything you need to know.
What is the pensions triple lock?
The pensions triple lock was a policy brought in by David Cameron’s Conservative/Liberal Democrat coalition Government in 2010 and has been a key policy for Tory administrations ever since.
It is a policy that governs how much state pensions rise by and essentially guarantees that pensioners will never see their income fall.
As its name suggests, the triple lock has three things against which pension rises are guaranteed:
Inflation (as measured by the Consumer Price Index (CPI))
The average wage increase
State pensions will go up by whichever of these three things is highest, with all three mechanisms having been used since the policy’s introduction.
The triple lock was suspended for a year in September 2021 as the Government feared Covid would lead to wage increases of 8.8% (incidentally, this is a similar figure to that which CPI inflation is now expected to hit).
This was because people were returning to full-time work having been placed on furlough - which lowered the average wage - during the pandemic.
For the 2022/2023 financial year, it meant the triple lock became a double lock - guaranteeing pensions against inflation or the 2.5% figure.
This broke a 2019 Conservative manifesto promise to keep the triple lock in place for the duration of its term.
But on Monday, DWP Secretary Therese Coffey confirmed the return of the triple lock for the next financial year, which begins in April 2023.
How much more money will pensioners get?
The return of the triple lock is actually likely to be more symbolic than meaningful if current trends continue.
Inflation has soared since the double lock pensions mechanism was introduced, with the latest CPI 6.2% higher than a year ago - the biggest increase in 30 years.
Basing figures on the full new state pension, pensioners will only get a 3.1% increase to 185.15 a week (an extra £5.55 per week or £288.60 a year) for the 2022/2023 financial year.
But it’s anticipated the following year’s rise could be more like 8% to £199.96 per week (£14.81 a week or £770.12 over a year) as inflation is expected to continue to rocket - particularly in light of the Russia-Ukraine conflict.
This policy will expire in March 2024 - just a matter of weeks before the Government is likely to call the next General Election.