The decision to water down the “triple lock” would save the Treasury billions of pounds and is understood to be implemented next year. Prime Minister Boris Johnson was reportedly advised by his Cabinet ministers to temporarily alter the long-held promise due to a freak earnings rise, The Telegraph has claimed. The “triple lock” is a government pledge that the basic State Pension and new State Pension must rise each year in line with the highest of three possible figures: the rise in prices, the rise in earnings or 2.5 percent.
However, because of the COVID-19 pandemic, the average earnings rose by 7.4 percent in the three months to June, according to the figures released by the Office for National Statistics on Tuesday.
Government ministers are now becoming increasingly convinced that increasing state pensions by that much would be both too costly and unfair on workers.
The Telegraph reported that there are two options that have been submitted to the Prime Minister to fix the issue.
Both options would reportedly see state pensions rise by much less than the earnings rise.
The first option would see a two-year, rather than one year, average for earnings rises adopted, meaning that the fall in incomes last year during lockdown would be incorporated.
The second option would see average earnings not included in the calculation for pensions next year, with the inflation rate picked instead.
The inflation rate is expected to be around three percent.
If either option is implemented, the state pension would rise by closer to three percent rather than the seven percent due under the current arrangements.
The policy has been applied by subsequent governments and was championed by three Conservative prime ministers: David Cameron, Theresa May and now Mr Johnson.
It was also a part of Mr Johnson’s manifesto for the 2019 general election, which landed him and landslide victory.
One part of the manifesto said: “On entering government in 2010, the Conservatives acted decisively to protect the UK’s pensioners.”
“The ‘triple lock’ we introduced has meant that those who have worked hard and put in for decades can be confident that the state will be there to support them when they need it. We will keep the triple lock.”
Ministers are now set to argue that the Government’s stance on the “triple lock” is not being abandoned but merely changed in order to react to the “anomaly” of average earnings soaring recently as the economy slowly moves out of lockdown.
The increase in average earnings has been partly blamed on the disproportionate number of low-income jobs being lost during the pandemic.
Sources close to the Government told The Telegraph that an argument of “fairness” would be made to justify changes to the triple lock arrangements.
Government ministers will also likely decide that it would not be right to give people on state pensions a seven percent increase after a year of furloughed workers and high unemployment.
Mr Johnson is set to make his decision early next month with the final details still being agreed.
The final decision may not be announced until October.
Sir Steve Webb, the former Lib Dem MP who served as pensions minister under Mr Cameron, warned the Government against a long-term abandonment of the triple lock.
Sir Steve said: “I would accept a one-year adjustment to the earnings number. We all know the triple lock wasn’t designed for a time like this. A one-year earnings adjustment to a more sensible figure would be acceptable.
“But it would be a breach of faith to ditch the triple lock on a permanent basis. Pausing it for a year could lead to a suspicion that’s where it is going.”
According to a poll carried out this summer by the insurance company Canada Life, just 46 percent of UK adults backed keeping the triple lock in its current form.
The Treasury has been contacted for comment by Express.co.uk