Last month, the Government suspended the “triple lock” policy used to set how much the state pension rises each year. The state pension is supposed to increase each year in line with whichever of the following three things is highest: inflation, the average wage increase or 2.5 percent.
Known as the triple lock, it was introduced by the Conservative/Liberal Democrat coalition government in 2010.
However, during the coronavirus pandemic, many people were earning less than usual because they were placed on furlough.
Therefore, as people return to work and full pay, there has been an estimated eight percent increase in average earnings from May to June 2021.
Under the triple lock rule, it would mean that state pensions would need to rise by a similar amount.
But it was announced by Work and Pensions Secretary Therese Coffey that the triple lock will be suspended for 2022-2023.
However, Prem Sikka, an Emeritus Professor of Accounting, has accused the Government of “condemning pensioners to poverty”.
In his latest article of Left Foot Forward, Professor Sikka outlines how a pension increase could help lift many retirees out of poverty and add between £3bn to £5bn to the total pension cost.
However, the expert has claimed the Government thinks it is unaffordable, to which Professor Sikka said is “bogus”.
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“Last year, privatised train companies received £8.5bn.
“So claims of not being able to lift retirees out of poverty are not credible.”
At the end of his article, Professor Sikka said the decision to condemn current and future retirees to poverty “is a deliberate political choice”.
He said: “It has no economic justification.”
Professor Sikka’s comments come after it was announced pensioners will receive a boost of more than £5.50 a week to their state pension as of next April, due to the September inflation figures.
The latest CPI inflation figures mean the full new state pension will increase from £179.60 to £181.15 per week in April 2022.
The full basic state pension will also rise from £137.60 to £141.85 per week.
However, Becky O’Connor, head of pensions and savings at interactive investor, warned many pensioners will not be able to cope with rising energy bills.
She told Financial Reporter: “However, the economy remains volatile and retired people will be watching to see whether inflation continues to rise.
“If it does, then next year’s state pension increase may still not feel big enough to cope with rising bills.”
Tax experts previously warned the cash-strapped Treasury may be forced to suspend the triple lock for the second year in a row.