The Prime Minister is facing renewed pressure to abandon the state pension triple lock, with fresh calls for a rethink of the costly policy. Andy Burnham has acknowledged the triple lock is not popular with everyone, but he has ruled out scrapping it, citing the danger of breaking the Labour manifesto.
IFS proposes Australian-style pension system
Jonathan Cribb, deputy director of the Institute for Fiscal Studies (IFS), has now suggested a different approach. Speaking to the BBC, Mr Cribb proposed that the state pension could increase in line with workers' earnings, with a “temporary lock” to safeguard against a decline in average wages due to recession or high inflation.
He said: “It’s a reasonable way to increase the state pension over the long run that’s not as expensive but still generates increases.” The suggestion comes as the state pension looks set to rise above inflation once again next year, with wage growth currently the higher figure.
Triple lock mechanics and cost concerns
The triple lock ensures the rate climbs every year in line with whatever is highest out of inflation, wage growth or 2.5%. But this can result in costly above-inflation rises. Even if the amount surges in one particular year, it would still have to go up again the following year under triple lock rules.
Calls for a rethink are only likely to grow louder over the coming years, according to observers. Mr Burnham has acknowledged questions on the triple lock but has said it would be "dangerous" to go against the Labour manifesto.
