Liz Truss, who officially became Prime Minister of the United Kingdom on Tuesday, has been urged to drop the “unaffordable” triple lock on pensions, with experts deeming the policy “unsustainably expensive”.
Truss has previously stated that she will retain the triple lock, meaning that the state pension would be set to rise by the highest of inflation, earnings growth, or 2.5% each year.
This would see the state pension hit £200 per week for the first time next April amid inflation of 10.1%. What’s more, the state pension has increased faster than the average earnings eight times in the last 12 years.
Carl Emmerson, of research group the Institute of Fiscal Studies, said:
“The triple lock is expensive over the long run and therefore will need to be ditched at some point.
CPI indexation of the state pension in April 2023 and April 2024 – which will be a big cash increase – is defensible. It is just a question of whether the resulting increase in the state pension as a share of earnings should be locked in permanently.
This is clearly not sustainable, particularly amid the current economic downturn.”
Not only are the experts questioning the policy, but public opinion is also divided. According to Canada Life, more than half of adults (55%) believe the triple lock should stay. Yet, support for the measure increases significantly amongst the older generations with 78% of over 55s agreeing it should remain in place. This drops to just a third (33%) of 18 – 34-year-olds.
On the other hand, a fifth (18%) think the government should revert to a “double lock” and increase the state pension by either 2.5% or the rise in earnings, whichever is the higher. This falls to just 9% of over 55s compared with 26% of 18 to 34s and 21% of 35 to 54s that feel this way.
Andrew Tully, technical director at Canada Life said:
“When we analyse the data, we can see a difference of opinion between the generations. Unsurprisingly perhaps, the vast majority of over 55’s support the triple lock, but less than a third of under 35’s are in favour of the mechanism.
While this largest ever increase to the State Pension will be an added strain on the public purse, it’s clear there would be a significant political challenge if our new Prime Minister was to suggest watering it down.”
One Response
If state pensions increase, then although it seems expensive, surley the amount of pensioners on benefits would decrease. And it’s not only the money to take into account…it’s the cost if the admin.