The Department for Work and Pensions (DWP) has been urged to consider three major changes to the state pension system, but experts have labelled the proposals as 'deeply troubling'. A report from the Tony Blair Institute, the think tank of former Prime Minister Sir Tony Blair, calls for the abolition of the Triple Lock, Pension Credit, and the state pension age.
What the Report Proposes
The bombshell report, released on Friday, recommends that the DWP scrap the Triple Lock pledge, which guarantees that the state pension increases by the highest of inflation, average earnings growth, or 2.5%. It also calls for an end to Pension Credit, a means-tested benefit for pensioners on low incomes, and the state pension age, currently set at 66 and rising to 67.
Expert Reactions
Former Liberal Democrats Pensions Minister Sir Steve Webb, who introduced the Triple Lock in 2011 under the coalition government, described the proposals as 'deeply troubling'. He told the iPaper: 'The idea of linking state pension payments to individual health records and individual life expectancy is deeply troubling. Leaving aside issues of confidentiality and data quality, it is very hard to make a precise leap from health records to life expectancy.'
Webb added: 'The report says that they would not want to pay higher pensions to those who had poorer health because of lifestyle choices such as smoking, but it is very hard to see how they would exclude the impact of smoking on someone's overall health.'
Jonathan Cribb, deputy director and head of retirement, savings and ageing at the Institute for Fiscal Studies, warned: 'Any increase in flexibility here needs to be balanced against the increasing complexity of the system – and indeed this move would be in the opposite direction to reforms that have simplified the state pension system in recent decades.'
Tom Selby, director of public policy at AJ Bell, commented: 'Being able to access your state pension earlier at a reduced rate could benefit some, particularly those with lower life expectancy. But most people simply have no idea how long they might live for and if large numbers of people go down that road, it could exacerbate retirement income challenges later in life.'
Selby continued: 'Moreover, moving from a single-tier benefit to a flexible benefit would create fiendish complexity, both for people engaging with the new system and in transitioning from the current framework. The report is absolutely right that the triple lock will need to be scrapped at some point, but it also opens up a debate on whether the state pension itself should be a stable foundation or a more flexible income people can tailor to their needs.'
