The Department for Work and Pensions is facing renewed demands to abolish the Triple Lock mechanism for state pensions. Personal finance experts have voiced their opinions on the future of this metric, which applies to both New and Basic State Pension claimants.
Polly Toynbee Joins Calls for Reform
Polly Toynbee has become the latest prominent figure to speak out, writing in The Guardian: "The right wants money for defence. It should start with MoD wastefulness – or even the pensioner triple lock." She added: "Like the Institute for Fiscal Studies, the Resolution Foundation just produced a devastating critique entitled What a ratchet! Why it’s time to stop being polite about the triple lock. The state pension ratchets up at twice the rate of unemployment benefits, and pensioners have seen three times as much living standards growth as non-pensioners in the last 20 years."
Understanding the Triple Lock
The Triple Lock was introduced in 2010. Its purpose is to ensure the State Pension does not lose value over time. Each year, it guarantees that the State Pension will rise by the highest of three measures: average earnings, inflation (measured by the Consumer Prices Index), or 2.5%. For example, if average earnings rose by 2% and inflation by 3%, the pension would increase by 3%. Changes are typically announced in the Autumn Budget and come into force the following April.
Lord Walker's Criticism
Lord Walker, the influential Iceland boss and Labour peer, has also called for the Triple Lock to be scrapped, describing it as "profoundly unfair." In a House of Lords debate on welfare reform, he argued for replacing the state pension system due to spiralling costs. "Let us jettison the worn-out stereotype of who constitutes the biggest drain on our benefits system," Walker said. "We should have the courage to challenge the pensions triple lock. It is mathematically unsustainable, politically untouchable and profoundly unfair: we all know it."
Cost Implications
Reformers suggest keeping pension rises in line with average earnings. The Office for Budget Responsibility estimates this would save £12.6 billion by 2029. However, critics note that when the right discusses shifting funds from welfare to defence, the Triple Lock remains untouched.
