The Social Security (Uprating of Benefits) Bill 2021-22 was published on 8 September 2021. The Bill would suspend the earnings element of the State Pensions ‘triple lock’. This would only apply for the tax year 2022/23.

This would mean that the basic State Pension, the full rate of the new State Pension, the Standard Minimum Guarantee in Pension Credit, and survivors’ benefits in Industrial Death Benefit, increase by either inflation or 2.5% (whichever is greater) at the April 2022 benefits uprating.

The Bill is expected complete all its Commons stages on Monday 20 September.

What is the triple lock?

The triple lock is a Government commitment to increase State Pensions each year in line with earnings, prices, or 2.5%; whichever is highest.

The earnings measure used by the Department for Work and Pensions (DWP) for the triple lock is the year-on-year increase in the Average Weekly Earnings (AWE) index for May to July. Following negative earnings growth in mid-2020, the AWE index has risen sharply. The annual increase in the AWE index for the three months to July 2021 was 8.3%.

The Government states that this year’s earnings measure is “skewed and distorted” because of the effects of the coronavirus pandemic on the labour market and is “not a real-life basis” for uprating State Pensions next year. It states that uprating State Pensions next year by either inflation or 2.5% (whichever is larger) would preserve and protect pensioners’ spending power from higher costs of living, while ensuring pensioners “are not unfairly benefiting from a statistical anomaly”.

The Library estimates that:

  • Uprating the triple-locked elements of the State Pension by 2.5% instead of 8.3% saves £5billion in State Pension expenditure in 2022/23;
  • If, alternatively, the triple-locked elements were to be uprated by 3.2% (in line with the August 2021 rate of CPI inflation) instead of 8.3% earnings growth, the saving in State Pension expenditure would be £4.5 billion in 2022/23.

The Bill follows a previous Social Security (Uprating of Benefits) Bill introduced in the 2019-21 parliamentary session. This was in response to the fall in average earnings over summer 2020, due to the pandemic. As legislation prevents the Secretary of State from bringing forward an Uprating Order if earnings growth is negative, this Bill was necessary to enable State Pensions and other benefits listed above to be uprated from April 2021. State Pensions and the other relevant amounts increased by 2.5% from April 2021.

Parliamentary timetable for the Bill

As with the 2019-21 Bill, the new Bill is to be fast-tracked through Parliament. The Government says this is necessary to meet the annual uprating timetable and associated hard IT delivery deadlines. It states that the Bill was introduced “as soon as possible after it became clear from the indices that earnings growth over the review period had been significantly affected by the Coronavirus pandemic.” (Bill 185 2021-22-EN, para 23).

Further background can be found in the following Library briefings:

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