Yet it’s under threat like never before. As the UK’s debt pile races towards £3trillion and borrowing costs soar, politicians will be looking for cutbacks. And once again, the Treasury is eyeing up the triple lock. The Labour government has pledged to protect it until the end of this parliament. After that, nobody knows. There is one hope. No party will want to go to the nation promising to axe the triple lock. There are more than 13 million pensioners and a very high proportion vote.
Today, the triple lock is safe. Despite that, 500,000 pensioners won’t be getting any triple lock increase. They may never get one. Why? Because although they’re British, they have retired to countries that have no social security agreement with the UK. They miss out on a fortune as a result. It demonstrates just how valuable the triple lock is, and why pensioners are so desperate to retain it.
Surprisingly, this applies in Australia, Canada, New Zealand or South Africa, which have strong historical and cultural ties to the UK. There’s a long-standing campaign to get the UK government to change its mind, so far to no avail. By contrast, people living in the EU and the US currently continue to receive annual increases.
If retiring abroad, it’s vital to check the rules for your chosen destination before making the move, says Emma Furlonger, managing director for workplace pensions at Standard Life. “Over a long retirement, missing annual increases could make a meaningful difference to your income.”
It certainly can. Today, the full new state pension is £12,547 a year. Somebody who left the UK in the 2021/22 tax year will get at most £9,339 a year. That’s £3,200 a year less annual income and the gap will continue to grow every year.
In 2016/17, the full new state pension was just £8,094. That’s £4,453 lower than today, and the gap between today’s payment will only widen. Over the course of a retirement, the total loss could run to tens of thousands of pounds.
Those figures don’t just highlight the danger of moving abroad. They also show just how valuable the state pension triple lock really is.
Pensioners would still get annual increases under any replacement mechanism. One suggestion is that the state pension should rise purely with earnings, with the inflation element and 2.5% backstop both scrapped.
But over the years, that would still make a significant difference. And the gap would compound over time.
That’s why pensioners prize the triple lock so highly. Those who don’t benefit from it really miss it.
