1st August 2016
Downing Street has ruled out any change to the triple lock on upgrades to the state pension before 2020.
A government spokesperson said: “The manifesto contains a commitment to protect the triple lock. That commitment still stands.”
In an interview in the Observer, Ros Altmann, pension minister under David Cameron said that she had proposed moving to a double lock but that it had been overruled for political reasons.
The pension currently upgrades by the higher of three measures, average earnings, inflation or 2.5%. Altmann suggested that the last by abandoned by 2020 because it was building enormous costs into the system.
Baroness Altmann told the Observer that she attempted to persuade David Cameron, the former Prime Minister, to drop the triple lock.
Altmann added: “I was proposing a double lock whereby either you increase state pensions in line with prices or with earnings. Absolutely we must protect pensioner incomes, but the 2.5 per cent bit doesn’t make sense. If, for example, we went into a period of deflation where everything, both earnings and prices was falling, then putting up pensions by 2.5 per cent is a bit out of all proportion.”
Tom McPhail, head of retirement policy at Hargreaves Lansdown says: “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 Altmann.
“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.”