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  • Tamara Wright

Everything you need to know about the State Pension Triple-lock



In 2010, the Tory-Lib Dem coalition government introduced a ‘triple-lock’ to state pensions. This system guarantees that the value of the pension will not erode by the gradual increase in cost of living thus keeping its ‘purchasing power’.

It works by increasing the amount paid to a pensioner every year by the higher of:

  • inflation;

  • average earnings;

  • minimum of 2.5%.


How does this affect my pension?


Your pension will grow by a rate each year that allows you to purchase the same value of goods as the previous year.


For example: If the triple-lock was replaced by a link to average earnings and inflation is higher than average earnings then you would lose purchasing power and unable to buy as much with your money.

Despite Covid-19 and rumours of scrapping the triple-lock, the government recently confirmed it will be maintaining the guarantee for the year 21/22. The triple-lock is due to end April 2022.


The UK already have the poorest state pension in the European Union and Covid-19 definitely hasn’t helped the countries finances. Will the unsurprisingly expensive triple-lock system still be in place in 2 years time? Highly unlikely…


A double-lock has been previously suggested which would mean the state pension would increase by only the highest of wage growth or inflation. Alternatively is it maybe time for a clean-slate and fresh way of protecting pensioners income whilst also saving the pockets of tax-payers?


How will this work for an expat planning to retire abroad?


Whether in search of warmer weather, higher standard of living or a healthier lifestyle it is no surprise nearly half of over 50s plan to retire abroad. For everyone entitled to the UK state pension, the government will pay your retirement income worldwide.

However, it is important to note the government only pays the yearly increase for countries within the European Economic Area, Switzerland or countries that have a social security agreement with the UK (except Canada and New Zealand).


Countries outside of these zones will have their pensions ‘frozen’ at the initial payment amount.

For example: A 66-year old retiree who lives in Canada and is entitled to the full amount of state pension, will receive £9110 only per year and every year thereafter.


Brexit concerns


Although the events of this year have been unprecedented, the UK still plans to leave the EU by the end of the year, once the transition period is over. This is one of the top concerns for expats who are thinking of retiring abroad but it all depends on future negotiations. Ultimately, the deal will determine the outcome for people who plan to move abroad after 2021 depending on the UK’s future relationship with the EU.

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