State pensioner expats living in Spain are being warned over their finances after the loss of the Winter Fuel Payment and issues with the Triple Lock system too.
The state pension Triple Lock, introduced by the coalition in 2010, sets out to ensure that the real value of pensioners’ income isn’t reduced by the impact of inflation.
The Triple Lock increases the state pension based on wage growth, inflation or a fixed 2.5 percent, whichever is highest.
But the CPI inflation rate in the Triple Lock is based on the UK’s inflation, and expats living in Spain have suffered even worse inflation in the country this year than the UK.
It means as a result that the state pension Brits are receiving while they live in Spain isn’t keeping up with the level of inflation in Spain.
While inflation hovered at around 2 percent in the UK, in the Balearics, inflation rose by 3.2 percent between January and August, the highest of all regions in Spain, according to the Mallorca Daily Bulletin.
Hotel, cafe and restaurant prices in the Balearics have risen 10.2 percent, leisure and culture is up 5 percent and housing is up 4.9 percent.
Of course, wage growth looks to be higher than inflation currently, which would add about £460 to the state pension, which would help to keep up with Spanish price rises – but the final figures are not yet confirmed and could in theory drop to just 2.5 percent if wage growth isn’t maintained, falling behind Spanish inflation increases even though the Triple Lock is being maintained as Labour promised to.
Over the medium to long term, there are fears that the Triple Lock system could be replaced entirely thanks to the pressure on the public purse, with the man who introduced the Triple Lock suggesting a ‘double lock’ instead tied only to UK wage growth could be put in place eventually.
