The Terms of Reference for the Independent Third Review of State Pension age include an instruction to assume ‘current policies regarding the entitlement and value of the State Pension remain unchanged over the long term’.
Steven Cameron, Pensions Director at Aegon comments on what this could mean for the future of the State Pension triple lock: “The Government has launched its third independent review into the State Pension Age. In the Terms of Reference, the Government instructs the reviewers to assume ‘current policies regarding the entitlement and value of the State Pension remain unchanged over the long term’. The future value of the state pension is currently set by the triple lock, with year on year increases equal to the highest of price inflation, earnings growth or 2.5%. The Government has not committed to retaining the triple lock beyond this Parliament but has instructed the review to assume it continues indefinitely.
“While some may take comfort in this, it could be false comfort. The purpose of the review is to look at the age the State Pension starts from and the role this plays in managing the long-term sustainability of the State Pension. As other reports have shown, the triple lock puts the long-term sustainability of the state pension under huge pressure. So the conclusions from the review may be that if the triple lock continues, state pension age will have to go up further and faster than if it didn’t continue.
“For those already receiving their state pension, any threat to the triple lock will be bad news. But for those who haven’t yet reached state pension age, the consequence of an ongoing triple lock could be having to wait extra years before receiving their state pension. That’s a hard choice, but it’s one we need to face up to as a nation. Undertaking this independent review will allow the Government to set out these choices to the voting public.”
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