Should we give an 8% triple lock pension rise caused by workers' pain?
A deal is a deal. Negotiate and be prepared to walk away while you strike it, but once youve signed on the dotted line you should endeavour to stick to it. But as much as you can make such a claim, we all know there are exceptions where things might need to be rethought. While already deep in a pile-up of awkward things to deal with, the Government is watching one of those difficult moments rumble down the road  a potential 8 per cent state pension rise due to a glitch in the triple lock. It's tactic until now has seemed to be to home the problem goes away, but today the Chancellor Rishi Sunak dropped his first hint that the promise might need a tweak. The triple lock could spell a huge 8% state pension rise this year due to a quirk in earnings data  The government made a deal in its manifesto to stick with the triple lock, which raises the state pension by whichever is the highest of consumer prices inflation, average annual wage growth, or 2.5 per cent. It uses Septembers inflation figure but Julys average earnings number, and this week the UKs public finances watchdog, the Office for Budget Responsibility, warned that the latter could trigger a shock 3billion bill. This would come from pensioners getting a bumper rise due to a quirk from the coronavirus crisis. Average earnings figures are temporarily being distorted by furlough, lockdown job losses and a comparison to pay cuts in the depths of the crash a year ago, meaning that average wage growth is currently coming in at a high level and rising. Annual wage growth climbed to 5.6 per cent in the three months to April, according to the latest official figures, and the crucial three months to July figure could hit 8 per cent. Under the triple lock deal struck by the David Cameron government, maintained by Theresa May, and renewed as a pledge in Boris Johnsons Conservative manifesto, this means the state pension should go up by that same amount  delivering a potential rise to 194 a week. This would be extremely generous but not so much of a problem if peoples wages really were rising by 8 per cent annually. Unfortunately, they are not. Poll Should the Government honour the triple lock, if it means a huge rise in the state pension Yes No Should the Government honour the triple lock, if it means a huge rise in the state pension Yes 1047 votes  No 92 votes Now share your opinion      In fact, millions ended up on furlough over the past year, lots of lower paid people lost their jobs, and a sizeable chunk of those who kept theirs took a pay cut. The public sector has a pay freeze, nurses helping us through the coronavirus pandemic are on for a 1 per cent pay rise, and a lot of private sector workers pay review experiences this year amounted to zero. The bumper wage growth figures are artificially high as pay is being compared to a year ago when wages were depressed by people being furloughed or taking temporary pay cuts. Meanwhile, many jobs axed in the pandemic have also been lower-paid roles and their removal increases the average. You might think a measure of wage growth that is an official national statistic and is used to decide millions of peoples pensions would be sophisticated enough to adjust for such an idiosyncrasy, but it seems it isnt. So, we are presented with the awkward situation where those of working age  particularly the younger generations  have born the financial brunt of lockdown and the economic crash it triggered, while the retired are due a huge state pension increase based on a statistical oddity directly related to those workers pain. This is a conundrum thats been debated by pension experts over recent months, as it became clear there was a storm rolling in. Steve Cameron, of Aegon, said: 'State pensions are paid for by National Insurance contributions of todays workers. 'So granting state pensioners a rise considerably greater than that those of working age might effectively mean that younger generations are subsidising those above state pension age.  The governments response so far has been to indicate it plans to stick to its promise, while also seemingly hoping the problem goes away. The Prime Minister's official spokesman said last month: 'There is still significant uncertainty around the trajectory of average earnings and whether there will be a spike as has been forecasted.' 'Our focus is to ensure fairness both for pensioners and taxpayers.' And its true, the spike to 8 per cent might not come. More lower-paid workers returning to the economy might drag the average back down a bit and the statistical gyrations may swing the Chancellors way, but its clearly enough of an issue for the OBR to flag it. One option might be for Boris Johnson and his Chancellor Rishi Sunak to point out this is an oddity and smooth the number somehow by using a longer-run average figure. That will prove highly unpopular with pensioners, as our recent poll indicated: 92 per cent of 1,100 readers (and counting) backed honouring the triple lock even if it meant a huge rise in the state pension.