“The triple lock has proven very costly in recent years, producing record increases because of highly volatile economic conditions and spikes in both price inflation and earnings growth. But it’s also a hugely popular policy with many pensioners heavily or indeed solely reliant on their state pension to live off in later years. We know from our own Second 50 research that 96% of workers in the UK expect to rely on the state pension to some extent in retirement.
“It’s essential that all political parties set out their future policies very clearly to voters of all ages ahead of the election. While the triple lock is on the face of it appealing to voters, intergenerational fairness must be a long-term consideration.
“State pension clarity is key but all parties need to make sure they’ve properly counted the costs. Politicians and individuals alike will be hoping that the period of skyrocketing inflation is past. If we return to a more stable environment with inflation nearer the Bank of England target of 2% and future wage rises likewise more modest, then the triple lock won’t prove quite as costly as in the last few years. This may make it more sustainable, although we must remember it’s paid for out of the National Insurance contributions of today’s workers, not out of some magic pot of money.
“Even if parties do commit to a triple lock approach, there are strong arguments for revisiting the exact formula to make sure the increases it produces are more predictable. For example, rather than looking at inflation or earnings growth over 12 months, some form of averaging over a longer period might produce results fairer for all.”
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