The government should consider using more timely inflation and earnings growth data as part of long-term plans for the state pension triple lock, Aegon has said.

The September inflation figure that could be used for the state pension increase in April will be announced next week (18 October), although it is expected to be below the 8.5 per cent earnings growth figure for May-July, which was published in August.

While Aegon acknowledged that state pension rises need to be confirmed early enough to adjust systems and give pensioners advance notice, it said it should be possible to use data closer to the actual increase in April to avoid distortions.

It urged the UK’s major political parties to commit to an improved triple lock system in their manifestos ahead of the next general election.

Aegon pensions director, Steven Cameron, stated that while the triple lock is a highly valued benefit to pensioners, it comes at a high cost to those of working age, with spiralling costs raising issues of intergenerational fairness and debate around its long-term sustainability.

“When both the rates of earnings growth and inflation are particularly high and volatile, as they currently are, setting the triple lock based on September’s year-to-date inflation figure and year-on-year earnings growth for May to July leaves huge scope for the resulting increase to be out of sync with conditions by the time they are implemented the following April,” he continued.

“Increases need to be confirmed early enough to adjust systems and to give pensioners advance notice, as the state pension is a key component of many people’s later life income. But in today’s digital age, it should be possible to use data closer to the date of actual increase in April.

“Doing so would avoid state pensioners receiving increases which are either far above or far below the most recent rates of inflation, or which bear little resemblance to the ruling increases in average earnings.

“With the government committed to further driving down inflation, against a target of 2 per cent, it’s quite conceivable that inflation next April could be below 5 per cent.

“So, an 8.5 per cent increase could grant state pensioners a boost that is around double the rate of inflation, fuelling the intergenerational fairness debate.”

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