Scrap triple lock and reform state pension, Jeremy Hunt urged in major IFS report
The government has been urged to scrap the triple lock and reform the state pension by a leading economic think tank.
In a report published on Wednesday, the Institute for Fiscal Studies (IFS) put forward four proposals to save Brits money on pension spending.
Under the triple lock, the state pension usually rises each April by inflation, wages or 2.5 per cent – whichever is higher.
In a major report, the IFS entitled ‘the future of the state pension’, it lists a number of problems for the pension, including Britain’s ageing population, which “will add considerable pressure on public finances in coming decades”.
It added that ‘triple lock’ “ratchets up the value of, and spending on, the state pension over time in a way that creates uncertainty around what the level of the state pension will be relative to average earnings”.
The IFS predicts it “could easily cost anywhere between an additional £5bn and £40bn per year in 2050 in today’s terms”.
It called for four key changes, including a “target level for the new state pension, expressed as a share of median full-time earnings”, which will increase “at least in line with inflation”.
The IFS report issues a ‘four-point pension guarantee’.
It added the state pension would not be means tested, which the government confirmed it had no plans to implement.
This comes as the government has been reportedly considering whether to raise the state pension age.
Currently, it can be claimed from age 66, rising to 67 by 2028. It has also been considering if it should change — or even scrap — the triple lock.
Increasing the state pension age or triple lock may be politically unpopular with older voters, especially before an election, expected next year.
Responding to the IFS findings, a Department for Work and Pensions spokesperson said: “We want to ensure the State Pension remains the foundation of income in retirement for future generations in a way that it is sustainable and fair.
“Thanks to our Triple Lock promise, the full rate of the New State Pension will rise to over £11,500 a year, and there are currently 200,000 fewer pensioners in absolute poverty than in 2009/10.
“Our recent State Pension Age review concluded that a universal State Pension age remained the best system, providing simplicity and clarity for people, and we also remain committed to the principle of providing 10 years notice of changes to State Pension age, enabling people to plan effectively for retirement.”
Yesterday, Labour’s shadow work and pensions minister Liz Kendall told City PM it has “no plans” to change the pensions triple lock.