State pension fury: Britons warned they face ‘real-terms cut’ in chaotic 2022

Budget 2021: Experts outline state pension changes

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MPs will today consider a House of Lords amendment to the Social Security Bill which seeks to reinstate the triple lock. Last Tuesday, the House of Lords voted 220 to 178 in favour of retaining the policy which the Commons voted to suspend for a year. The Government expects to save £5.4billion in 2022/23 following the decision to increase the state pension by 3.1 percent inflation figure rather than July’s 8.3 percent earnings growth figure. Labour peer Prem Sikka warned this week that the ongoing scrutiny over MPs’ second jobs will create questions over the state pension triple lock.

He said: “The irony is that MPs are making thousands from second jobs but they’re trying to prevent pensioners from receiving a decent pension when many [older people] are already in poverty.”

Another Labour peer, Baroness Ros Altmann, warned last week that the suspension of the triple lock will result in a “real terms cut” for pensioners due to rising inflation.

She said: “It is a myth that all pensioners are well-off. More than half of pensioners live in poverty. These numbers will grow if this bill is passed without amendment

“[So] 3.1 percent is clearly a real-terms cut in the state pension.”

The 3.1 percent increase in pension is based on September’s figure of the previous year, but there are fears inflation will outstrip this in the months to come.

During his Budget announcement, Chancellor of the Exchequer Rishi Sunak warned of inflation figures averaging at four percent next year.

The Bank of England has also warned that inflation could soar as high as five percent next year.

With prices rising, the 3.1 percent state pension increase may not be enough to cover costs.

Former pensions minister Steve Webb told that this could lead to a squeeze on living standards.

He explained: “The actual number they use is the September inflation figure. If it’s around three percent in September, that doesn’t mean to say that it won’t rise to five percent later down the line.

“This is important because I think we will see a squeeze on pensioner living standards next year. If you get a three percent rise, but by next April bills go up, your cost of living may have gone up by as much as six percent.”

October’s inflation figure is expected to be 3.9 percent, according to forecasts, sparking fears that prices will increase to their highest for a decade.

This prediction comes from a Refinitiv survey of economists. George Buckley, economist at Nomura, said ahead of a report from the Office for National Statistics on Wednesday that he expects inflation will climb further to 4.5 percent in November and to reach a peak of 5 percent in the spring of next year, in line with Bank of England expectations.

As MPs prepare to vote on the triple lock today, Caroline Abrahams, charity director at Age UK, warned the elected representatives to prevent poverty among pensioners.

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She told the Daily Mail today: “We cannot have a situation in which unforeseen cost pressures result in the poorest having to choose between heating and eating.”

Baroness Altmann also spoke to the newspaper, adding: “Do they really think it is right that Britain, with the lowest state pension in the world, can afford to cut taxes on banks and alcohol but can’t keep its promises to protect pensioners?

“The Government is imposing a three-line whip.

‘Only if enough Tories are willing to do the right thing and agree it is not right to cut pensions for millions of the poorest people in our country, with no other money, in the eye of a cost of living storm, can this pass.”

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