The Department for Work and Pensions (DWP) has been urged to end welfare 'freeloading' but protect the triple lock on state pensions. The Tony Blair Institute has proposed replacing the UK state pension with a Lifespan Fund from 2030, which would scrap the triple lock and introduce a smoothed earnings link.
Criticism of the Proposal
Andrew Orlowski of The Telegraph has called on the DWP to resist such changes. He wrote: 'Britain has some of the poorest pensioners in the developed world, with incomes below the EU and OECD averages, and the state component is often cited as the weakest link.'
Cost Comparisons
Research indicates that the triple lock commitment will cost £15.6 billion per annum by 2030. In contrast, Personal Independence Payment (PIP) welfare spending is projected to reach nearly £40 billion a year by the same date.
Andrew added: 'While there are many heartbreaking cases well deserving of PIP, the astonishing growth in these disability payments suggests that freeloading is rife.'
Expert Opinion on Pension Affordability
Mark Futcher, head of DC pensions at Barnett Waddingham, said: 'Any debate about the future affordability of the state pension is welcome and necessary, particularly given current fiscal and demographic pressures.'
He continued: 'However, the most important question is not just how the state pension is uprated, but whether working people are being supported to build sufficient retirement income alongside it. That means extending coverage to all workers, including the self-employed and those on lower or irregular earnings, and ensuring contributions are based on total earnings rather than a narrow band.'
'Equally important is adequacy,' he added. 'Current contribution rates are simply too low to deliver a reasonable standard of living in retirement for many people. Gradually increasing minimum contributions towards levels closer to 12 percent, with appropriate support for employers and employees, would make a far greater difference to retirement security than short-term changes to pension uprating mechanisms.'
