Steven Cameron, Director of Pensions at Aegon, said: “Speculation over reforming the state pension will be very concerning to state pensioners. While the Government has committed to the triple lock at least until the next election, the reality is it's something neither the current of any future government can't ignore.
“It is fascinating to see Kemi Badenoch ‘showing her cards first’ in this high-stakes game of state pension poker. Indeed, new Pensions Minister Torsten Bell might also be pleased that he's not the first to show his hand, especially after having previously spoken out in favour of reform.
“If the triple lock is left as is, over time, state pensioners will get higher increases than average wage growth. That lacks intergenerational fairness and it's not sustainable.
“Kemi Badenoch’s comments have been interpreted by some as suggesting means testing the triple lock. If this is correct, it would be highly contentious - where do you draw the line, how often would you carry out the means testing and how would pensioners understand what to expect?
“A fairer way might be to adapt the triple lock formula. Rather than increases each year being the highest of earnings growth, inflation or 2.5%, some smoothing could be introduced over time. Pensioners would receive an inflation increase as a minimum, and if over the previous three years wage growth has on average been higher than inflation, they’d get an extra uplift.
“This avoids widely fluctuating outcomes at times when both inflation and earnings growth are unpredictable, smoothing things out but ensuring pensioners still share in sustained increases in the nation's wealth.
“The 2.5% minimum might also be reviewed bearing in mind the focus on getting inflation down to 2%.
“If the triple lock were adjusted as above and therefore more sustainable and predictable, there would be less justification for any means testing of who was entitled to a triple lock increase or even worse the state pension itself!
“While state pensioners should take comfort from the government’s commitment to the triple lock for the term of this parliament, its future longer term has to be in question. A future-focused debate looking at all options is needed. We’d call on the Government and politicians from all parties to step up, and rather vote scoring, seek a sustainable solution that’s fair across the generations.”
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