Here’s what you need to know about the pension triple lock - and if it could be scrapped

Under the triple lock system, state pension payments rise each year, but this could now be under threat as the government looks at ways to reduce debts incurred by the coronavirus pandemic.

But how does the pension triple lock system work, and what would replace it if it was scrapped?

Here’s what you need to know.

What is the triple lock?

The state pension is currently increased by the triple lock. This guarantees that the basic state pension will rise by a minimum of either 2.5 per cent, the rate of inflation, or average earnings growth - whichever is largest.

It was introduced in 2011 by the coalition government. Before 2011, the state pension rose in line with the retail prices index (RPI) measure of inflation.

The idea behind it is to protect pensioners from insignificant increases in their pension.

The basic and new state pension rise each year under the triple lock mechanism.

This year, the State Pension rate increased by 3.9 percent, in accordance with wage growth.

Why is the triple lock under threat?

According to a Treasury document seen by the Telegraph, which is dated 5 May, chancellor Rishi Sunak has been advised to get rid of the triple lock on state pension rises.

The document predicts that Britain will have a budget deficit of £337billion. This is due to the amount of support that has been offered to the government throughout the coronavirus outbreak.

It was stated in the document that it would be difficult to fill the gap in public spending without breaking the triple lock.

The document suggested that in order to raise the revenue needed, the government would either have to increase pension tax relief or increase income tax, VAT and national insurance.