What does the future hold for the triple lock?
The ‘triple lock’ on state pensions has protected the older generation’s income since 2010, guaranteeing that pensions will rise each year in line with the highest of either the average earnings, the consumer price index, or 2.5%. But the triple lock’s days look increasingly numbered, with an increasing number of financial and political figures calling for it to be scrapped.
Back in November 2016, the Work and Pensions Committee criticised the triple lock, describing it as both “unfair” on the younger generation and “unsustainable” in the long term and calling for the new state pension and basic state pension to be linked to average earnings alone. They also proposed the development of a formula to protect pensioners during periods where earnings are lower than price inflation.
More recently, former pensions minister Ros Altmann has denounced the triple lock on her blog as “a lazy way of claiming to offer pensioners brilliant protection” which is “increasingly unfair”. She goes on to explain: “If the new state pension (designed to always be above pension credit level) remains triple locked, while pension credit only increases with earnings, then the poorest and oldest pensioners will become relatively poorer”.
Responses to the review of the state pension by former chief of the Confederation of British Industry John Cridland have also seen calls for the triple lock to be dropped. A number of respondents called for the Cridland Review to make major changes to the state pension system, including a move away from the triple lock and towards indexation in line with earnings.
In his Autumn Statement last year, the chancellor Philip Hammond indicated that the triple lock would remain in place until at least 2020, when the next general election is expected to take place. If the pressure continues to mount against it, many feel the government may be forced to remove the triple lock much earlier, with some predicting its demise before the end of 2017. Labour have recently come out in support of the triple lock, however, pledging to keep it in place until at least 2025, making the future of the mechanism even more difficult to predict.