The former Pensions Minister Ros Altmann has called into question the government’s State Pension triple lock promise, arguing the 2.5% element should be scrapped from 2020, turning it into a double lock, based on inflation and earnings.
Tom McPhail, Head of Retirement Policy at Hargreaves Lansdown:
“The triple lock was never going to be sustainable in the long term and for as long as it exists, it will divert an ever increasing share of government spending towards pensioners, at the expense of the working population. A balance always needs to be struck between protecting the standard of living of pensioners, and not over-burdening taxpayers. There is a strong case for using a dedicated pensioners’ RPI measure for inflation-proofing the state pension, rather than either a triple lock, or the double lock proposed by Ros.
A review of state pension inflation-proofing policy could throw other elements into the mix. Next year sees a long-scheduled review of state pension ages. There is an argument for raising state pension age faster, modifying the triple lock and at the same time further increasing the level of the state pension. The new single tier state pension is worth around £8,000 a year; if this could be pushed up nearer to £10,000 a year, then having to wait a couple more years to receive it and sacrificing the triple lock might be acceptable compromises.”
A DWP forecast of the cost of the Triple Lock in July 2011 indicated that it could be as high as an extra £45 billion by 2025/26.
A Pensioner specific RPI measure already exists and could be adopted (with modification if necessary) as an alternative to the triple lock.
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NOTES TO EDITORS
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