Millions of pensioners hit by low inflation despite “triple lock”

Press Release: 14 October 2015

Millions of pensioners hit by low inflation despite “triple lock”

Britain’s biggest pensioners’ organisation, the National Pensioners Convention (NPC) has warned that millions of older people will be hit by the latest inflation figures, which show the Consumer Price Index (CPI) for September at –0.1%.

Traditionally, the September inflation figure is used to calculate the following April’s increase in pensions and benefits.

Whilst the basic state pension of £115.95 a week will therefore rise in line with the “triple lock” guarantee by at least 2.5%, the state second pension and millions of occupational pensions that are tied to the CPI will effectively be frozen. The only increase that pensioners will therefore receive next April is around £2.90 a week for those on a full basic state pension, with many women getting around just £1.75.

The decision by the Coalition government in 2010 to switch from the Retail Price Index to CPI has already had a serious effect on pensioner incomes. For example, the figures below show the difference in the last five years of £1353 between an RPI and CPI linked pension pot of £10,000:

2010 £10,000 £10,000
2011 £10,460 £10,310
2012 £11,046 £10,846
2013 £11,333 £11,085
2014 £11,696 £11,384
2015 £11,965 £11,521
£66,499 £65,146

Dot Gibson, NPC general secretary said: “The previous government’s decision to change the way in which inflation was measured continues to have a dramatic effect on older people’s income. Whilst the 2.5% guarantee of the triple lock is welcome, it still only gives pensioners less than £3 a week extra and the fact that the state second pension and most occupational pensions are tied to CPI means that next year millions of older people are going to struggle with the rising costs of living. The reality is that our state pension is so low that 2.5% of nothing is still nothing.”

ENDS

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