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COVID-19 forces Treasury to rethink State Pension triple-lock

In an attempt to recoup billions of pounds it has spent on coronavirus support schemes, the government is reportedly considering scrapping the pensions triple lock.

The triple-lock system determines the annual increase in the State Pension by whichever is the highest of average wage growth, price increases, or 2.5%.

In April 2020, the State Pension for 2020/21 increased by 3.9% in line with the average earnings increase seen by UK workers in July last year – a rise of £343 for new State Pension recipients.

However, the Telegraph claims to have seen a report from the Treasury in which Chancellor Rishi Sunak is advised to abandon the triple-lock on State Pension rises.

According to the same report, the government’s COVID-19 support measures have resulted in the UK facing a £337 billion budget deficit this year.

The report also states that the Chancellor has been consider cutting spending and raising taxes this year to raise up to £30 billion needed to stabilise debts.

Scrapping the triple-lock or raising taxes from 2021/22 would go against two manifesto pledges made by the Conservatives in their General Election campaign last year. 

Andrew Tully, Technical Director at Canada Life, said:

“Any changes to the triple-lock need to be well thought out and preferably have cross-party support, so we have a sustainable long-term policy.”

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