State pension triple lock ‘not sustainable’

Autumn Statement: Hunt on pension triple lock

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

The state pension triple lock is often seen as a vital entitlement for older Britons. The policy has been in place since 2010, and ensures the sum rises each year by whichever is the highest of 2.5 percent, inflation or average earnings.

It was temporarily ditched this year, due to warped earnings data as a result of COVID-19.

However, from April onwards, the policy’s return will deliver a 10.1 percent boost in line with September’s CPI inflation figure.

This has piled pressure on concerns the triple lock is unaffordable, as the Government continues to grapple with tough economic decisions.

The Institute for Fiscal Studies (IFS) has warned the triple lock in its current form is “not sustainable”.

The think-tank stated the policy prioritised pensioners, implying a “significant intergenerational transfer”.

However, it warned this might not be as generous in the future for Britons who are currently working today.

It stated: “In the limit, this policy is not sustainable.

“It implies pensions becoming an ever-increasing share of national income.

DON’T MISS
Pensioners in 25 countries may receive boost worth up to £600 [INSIGHT]
Pensioners at risk of paying tax on retirement income [UPDATE]
Older pensioners set to get £2,500 less despite triple lock rise [LATEST]

“It is possible that the population currently of working age will not all end up benefitting in full from the same generosity.”

The think-tank highlighted growth in pensioner payments has significantly outstripped spending when it comes to working-age payments since the policy’s introduction in 2010.

Its analysis said real spending per working-age adult climbed from approximately £1,200 per year in the later 70s to £3,200 at the start of 2010, and then falling back to £2,500 shortly before the pandemic.

However, in comparison, spending on pensioners has climbed steadily, including during the 2010s.

The think-tank added: “The priority given to transfers made in the working-age portion of life versus those made during retirement is itself an important choice.

“It has, in recent years helped shape the austere context within which working-age transfer policy is made.”

The 10.1 percent increase to the state pension will see the biggest boost ever secured for eligible people.

The full new state pension will rise from its current level of £185.15 per week, to £203.85.

What is happening where you live? Find out by adding your postcode or visit InYourArea

The older, basic state pension will rise at its full value from £141.85 to £156.20 per week.

Some may get less than the full new state pension if they were contracted out before April 6, 2016. 

The return of the triple lock has been welcomed by millions of pensioners.

Announcing the policy, Chancellor Jeremy Hunt said in November: “Because we have taken difficult decisions elsewhere in this statement, I can today announce that we will fulfil our pledge to the country to protect the pensions triple lock.

“In April, the state pension will increase in line with inflation, an £870 increase which represents the biggest ever cash increase in the state pension.

“To the millions of pensioners who will benefit from this measure I say – now and always, this Government is on your side.”

Source: Read Full Article