Financial experts in the UK fear that, in the wake of the winter fuel payment changes, the future of the Triple Lock pension could also be in doubt and that will hit British pensioners in Mallorca hard. Under the triple lock system, the state pension increases each April in line with whichever of these three measures is highest:
• inflation in the September of the previous year, using a measure called the Consumer Prices Index (CPI)
• the average increase in total wages across the UK for May to June of the previous year
• or 2.5%
The triple lock was introduced by the Conservative-Liberal Democrat coalition government in 2010. It was designed to ensure the value of the state pension was not overtaken by the increase in the cost of living or the incomes of working people. However, British pensioners living in Mallorca have suffered the highest rate on inflation in Spain this year.
In fact, prices across the Balearics rose by 3.2 % between January and August 2024 compared to the same period last year, which represents the highest accumulated rate of inflation of all the regions of Spain. According to the National Statistics Institute (INE), in August the consumer price index (CPI) rose in region by 0.3 % compared to July and by 2.3 % compared to the same month in 2023.
In the first eight months of the year, prices have risen most in the products and services of hotels, cafés and restaurants (10.2 %), leisure and culture (5 %) and housing (4.9 %), while they have fallen only in clothing and footwear (12.3 %).
A senior Tory MP, one of the few remaining in parliament, told the Bulletin last month, that the new Labour government “is reneging on the triple lock (are you surprised?) in which case it will impact upon all - including ex- pats - in receipt of UK state retirement pension if they have previously been updated (some are already frozen of course)
“But, having looked into this it appears to be based upon the impact of the earnings figures element of the formula and is not the direct result of a change in government policy. Only in the sense that they may get less than the increase that they were hoping for next year but that is as a result of the way that the triple lock formula works. Percentage increases can go down as well as up!”
So, expats would be well, advised to check their position and how and if any change in government policy will impact them going forward because according to experts, hopes that they would get a bumper £655 pay rise in April 2025 appear to have been dashed. Now they’re likely to get £11.50 a month less than anticipated.