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Keeping the the triple lock - the system which ensures that the State Pension goes up each year by price inflation or average earnings growth or 2.5% whichever is the largest - could mean that millions of people in poorer areas of UK get no state pension whatsoever
The triple lock uprates the State Pension annually by the highest of price inflation, average earnings growth or 2.5%. The Work and Pensions Committee will today publish research on what will happen to the state pension age if the triple lock is maintained.
In its November 2016 report the Committee recommended that the triple lock be replaced from 2020 by a smoothed earnings link. This would tie the State Pension to a fixed percentage of average earnings but would also protect the purchasing power of the State Pension in periods when price inflation is greater than earnings growth.
A study by the Institute for Fiscal Studies (IFS) commissioned by the Work and Pensions Committee estimates that by 2060 this system would save £15 billion in today’s money.
The Committee commissioned the IFS to estimate the State Pension age increases that would be required to maintain expenditure on the triple-lock. The IFS found that the State Pension age would need to be 70.5 years by 2060, meaning today’s young would face working lives of over 50 years before receiving a state pension. In some areas of UK, where life expectancy is low, including Blackpool, Manchester and its surrounds, Teesside, Leicester, East London and the Wirral this would push the State Pension Age beyond average life expectancy.
There will be a debate in the House of Commons this afternoon which includes a motion to approve an extra £2.1bn of DWP spending in the current year.
“By 2020 the State Pension will be at a level where it will provide a decent minimum income for people in retirement to underpin private saving, and any savings they have will be kept on top of, not clawed back from, the State Pension. The triple lock will have done its job and it will be time therefore to retire it.” said Frank Field MP Chair of theWork and Pensions Committee,
Research by the Committee shows that, in a few deprived areas of England and Scotland, male life expectancy is below the level where living long enough to collect a pension is already a problem and many more where it would quickly become a problem if the pensionable age threshold continues to rise.
The latest available data at very local level show:
The government needs to grasp the nettle on removing the triple lock before the Pensions time bomb becomes the pensions crisis sitting alongside the health and social care crisis. Removing the triple lock might well prove unpopular with pensioners and a government thinking about an election in the short term might be unwilling to risk the enmity of such a large and powerful sector of the electorate. Any actions steming from todays debate may well turn out to be an indicator on Mrs May's election intentions.