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ONS data - inflation spike will increase pressure on triple


Following the release of ONS Monthly economic commentary: Jan 2017 showing increasing inflation alongside moderate wage growth, Rachael Griffin, financial planning expert at Old Mutual Wealth,comments on why this may place greater pressure on the state pension triple lock. 

Rachael Griffin"There are already signs that predicted inflation increases are beginning to show through in the prices we pay at the pumps and on the high street. This puts pressure on household finances for working people since it means we need bigger pay increases just to stand still.

"But retired people will see their state pension income protected against inflation. This is because of the 'triple lock' which ensures the state pension goes up each year by at least wage growth, inflation or 2.5%.

"A low wage growth but high inflation environment would see pensioners benefit disproportionately against the rest of the population.

"It also means the cost of the state pension will continue to increase, placing pressure on public finances.

"Yesterday the government came under renewed pressure from the influential Work and Pensions Committee to reform the triple lock to dilute the annual increases. This is designed to keep the cost of the state pension under control, as well as avoiding a situation where the working population are seen to be struggling while pensioners become better off.

"Recent data from the Office for National Statistics also shows that while overall income inequality has come down since the financial crisis, pensioner incomes have increased dramatically while younger households have struggled.

"Against this backdrop of debate about intergenerational inequality, the state pension triple lock will surely come under increased pressure this year, particularly when John Cridland reports back to government with his recommendations for reform."

For more information contact

Tim Skelton-SmithOld Mutual Wealth02380 916 99807824 145

Notes to Editors:

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