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Former pension ministers have warned that the triple lock on the national pension must be maintained no matter who wins the next election.
The future of the policy has been called into question by concerns that funding state pensions for the growing number of elderly people will deplete public finances.
Sir Keir Starmer, who is set to lead the next government, said this week: I He said he strongly believed in the triple lock but could not guarantee it would be included in Labour’s election manifesto.
This follows warnings from the Institute for Fiscal Studies that the policy is only sustainable in the short term and needs to change to secure the long-term future of the national pension.
But policy experts say, as Prime Minister Theresa May discovered during her 2017 election campaign, senior politicians risk talking about repeal in an election year because of the dire consequences for voters. I believe not.
Former ministers and members of parliament said the following. I The triple lock, which guarantees that the state pension increases at the highest of inflation, average earnings or 2.5% per year, is sustainable in the long term, and any proposals for means-tested pensions are “harmful” and unlikely. Should. something that can be avoided.
Former Work and Pensions Secretary Therese Coffey said the Triple Locks were “absolutely” sustainable in their current form, adding: “I can’t think of any politician who would vote to abolish them, or even try it. It’s a pretty unjust policy. exists,” he added. The company is running a campaign suggesting the latter based on anti-fraud measures in the Digital Bill. ”
But the former cabinet minister suggested that pension companies should be more proactive about improving returns for defined contribution members.
Nigel Mills, Conservative MP and member of the Work and Pensions Select Committee, said the triple lock should remain in place, but that the mechanism could be adjusted to make it more affordable, for example for three years. He said there is a possibility that it could be calculated based on interest rates. Moving averages of both inflation and earnings.
He said it was “too harmful” for politicians to talk about abolishing the triple lock in an election year.
“We don’t have a generous state pension,” he added. “No one can see any realistic suggestion that the state pension should not be increased by inflation. We restored the earnings link when we first took office. It is correct to increase accordingly.
“The problem with pensions rising in line with income or inflation, whichever is higher, is that they can get out of sync. And the state pension rises more than both.” That’s unexpected. It’s a habit [when the triple lock was created].
“If we calculate the three-year moving average of both indicators, the state pension is still increasing, but not by more than both.
“Whoever is in power after the next election should probably do that and the opposition should just shut up.
“Means testing is absolutely terrifying because it means people save less money. As a society, we already have a real problem with people not saving enough. ”
Steve Webb, Liberal Democrat pensions minister in the coalition government, said the UK’s state pension was one of the lowest in the developed world, and one reason for this was that the system was It said it was based on both pensions and workplace pensions, which were often very small.
Mr Webb, a partner at pensions consultancy LCP, added that while the recent large increases in state pensions looked large, they were only keeping up with inflation, which soared in 2021-2022.
This means that over the past two years, the full amount of your new state pension has increased by £35 a week, but £31 of that increase was in line with inflation.
Mr Webb said means testing would become a “nuclear option” and penalize people who have voluntarily saved for retirement.
He added: “National pension rates have risen sharply in recent years, but so have living costs and government income.
“Our state pension remains one of the lowest in the developed world, and it is difficult to understand why one of the richest countries in the world cannot afford a decent state pension.
“We are likely to have to work even longer before receiving the state pension in the future, but something more drastic like a means test is completely unacceptable.
“We have a voluntary system of workplace pensions, but if people who have saved on top of their state pension are penalized, millions will drop out and the progress made on automatic enrollment will be undone. maybe.
“The key to paying pensions is having a larger population of working age who are healthy and able to work and have a large tax base to pay into the system and fund pensions.”
But Baroness Altman, who was pensions minister in David Cameron’s government, said the triple lock was no longer sustainable.
He added: “Politicians should consider increasing the number of years required to receive full state pension benefits, so that costs can be managed more effectively.”
“If you haven’t lived or worked in the UK for, say, 45 or 50 years, you won’t receive your full state pension.
“There is also the possibility that the government could charge a fee to buy additional years, but this should be based on more commercial terms than the current system, and this is a great deal for those buying the years. But in most cases, it’s not a good buy for taxpayers.”
“I think the triple lock no longer makes sense and we should either increase the national pension in line with the highest double lock on income and prices, or leave it to the discretion of the government at the time each year.”
He said tax-free pensioner benefits, such as winter fuel payments, should be folded into the higher national pension to avoid “benefits for the wealthiest pensioners at the expense of others”. He proposed that it should be subject to taxation.
Mrs. Altman added: “We need a complete, cross-party, national review of all aspects of pensioner support to ensure that we do not continue to politicize the National Pension.
“Basic pensions are at a low level, and should continue to be the foundation of the social welfare system, with top-up payments made by people who want to save money for the future while working.”
However, as Prime Minister Theresa May found out when she proposed switching to a double lock during her 2017 election campaign, past attempts to reform or abolish the triple lock cost votes, which led to them losing their majority. This was a contributing factor.
Theo Bertram, incoming director of the Social Market Foundation and a former policy adviser in the Blair and Brown governments, said:
“Theresa May was the last Prime Minister to be honest about the fact that it was unsustainable (by advocating a ‘double lock’ in 2017), and things did not end well for her.
“Everyone has bought into this fiction since then, because all the Conservative leadership has been horrified by this, and Labor doesn’t want a political vacuum. But as always, there are At some point economic reality will intervene.”
Last month, Prime Minister Jeremy Hunt confirmed that maintaining the triple lock would be included in the Conservative party’s manifesto and that the pledge would apply to the entire next parliament if they won the general election.