17 October 2018

Webb calls for clarity from DWP on triple lock calculation - confusion over numbers led to £100m being wiped from pensions overnight.

3 min read

 
Steve Webb - Director of Policy

Steve Webb

Director of Policy, Royal London

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Royal London director of policy Steve Webb has called on the Department for Work and Pensions (DWP) to issue a clear policy statement on how the pension triple lock is calculated. The triple lock policy determines how much the State Pension is to be increased by every year. 

Under the rules the pension has to be increased by the highest of:

  • The growth in earnings;
  • The growth in prices, measured by the CPI which according to figures published this morning is 2.4%;
  • A minimum of 2.5%;

While the earnings number has traditionally been taken from July figures the DWP had said that the August figure (2.7%) would be used. However, it has since confirmed this was in error and that the July figure (2.6%) would in fact be used.

With today’s fall in CPI inflation, the pension will rise in line with the July earnings figure (2.6%).   The key figures (rounded to nearest 5p) are:

  2017/18 2018/19
Full 'new state pension' £164.35 £168.65
Old 'basic state pension' £125.95 £129.25

Webb said: “It is annoying that such uncertainty exists and we need DWP to give clarity on what figures it uses to calculate the triple lock. We calculate that using July figures instead of August leaves pensioners £100m worse off. It doesn’t make sense that out of date data should be used.”

-ENDS-

For further information please contact:

Steve Webb, Director of Policy

Helen Morrissey, Corporate PR Specialist – Long Term Savings

About Royal London:

Royal London is the largest mutual life, pensions and investment company in the UK, with funds under management of £117 billion, 8.8 million policies in force and 3,745 employees. Figures quoted are as at 30 June 2018.

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