THE triple lock on pensions, introduced by the Coalition Government in 2010, has not looked safe in Tory hands for some time. Challenged over the issue at the last Prime Minister’s Questions before the General Election, Theresa May would only say that under a Conservative Government, pensions would continue to rise. She also ducked a chance at the weekend to confirm that she would keep the triple lock if she won the election. It is only a question of time, it seems, before the triple lock is ditched.
Some of the doubts around the viability of the triple lock – which guarantees the state pension will rise by the same rate as average wages, inflation, or 2.5 per cent whichever is the highest – are understandable. A rise in life expectancy means pensioners are claiming an income for much longer than expected; the policy also means pensioners’ incomes have risen faster than the average income of those in work. In years to come, governments will have to find a better balance between the relative wealth of pensioners and the cost of their benefits.
However, now is not the time to drop the triple lock, mainly because it remains one of the few certainties in an uncertain economic landscape overshadowed by Brexit. It has also delivered big improvements to pensioners’ incomes since 2010 – indeed, without it, the state pension would be worth hundreds of pounds less a year.
Those improvements are particularly important for the poorest pensioners, who would be hardest hit by the ditching of the triple lock. In recent years, pensioners have often been portrayed as well-off baby boomers, but recent research by Age Scotland suggests that around 200,000 pensioners are struggling financially every day. One of the possible alternatives to a triple lock is a double lock which would link pension increases to earnings growth or inflation, but over time that would erode the value of the state pension and push even more elderly people into poverty.
Another significant factor is that hundreds of thousands of people are still approaching retirement without anything to supplement their state pension and more will need to be done to address this problem before abandoning the triple lock. Auto-enrolment pensions have undoubtedly been a success, but there is still a large part of the population which is not saving for their retirement. It is those pensioners who are likely to be reliant solely on the state pension and until a review can look at how to bring more into auto-enrolment, the triple lock is a welcome guarantee.
When asked about the issue of pensions, Theresa May says she plans to increase the powers of regulators over company pensions. She has also suggested that corporate takeovers could be blocked where the solvency of the company scheme appears to be threatened. All of these measures would be welcome. But Mrs May could do much more by ensuring that the state pension increases every year from what is undoubtedly a very low base. Anything else risks making the hard life of Britain’s poorest pensioners even harder.
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