A radical change to the state pension's Triple Lock could leave a staggering 25 million current and future pensioners struggling with an inadequate income in retirement, a former Pensions Minister has starkly warned.
Former Minister Warns of 'Fool's Paradise'
Sir Steve Webb, who served as the Liberal Democrats Pensions Minister, has issued a grave alert over mounting political pressure to alter the fundamental Triple Lock guarantee. The mechanism currently ensures the state pension rises by the highest of inflation, average earnings growth, or 2.5%.
Sir Steve criticised the notion of sustainability without the lock, describing the current situation as "living in a fool's paradise". The warning came during a recent event attended by around 200 pension professionals, organised by the Society of Pension Professionals (SPP).
The Ticking Time Bomb of Pension Savings
The driving force behind the proposed change is the UK's ballooning benefits and welfare bill. The Labour government is reportedly being advised to tweak the system. Analysis presented suggests that if the Triple Lock is scrapped and replaced with annual increases tied only to the Consumer Prices Index (CPI), the number of people facing an inadequate retirement income would leap to over 25 million.
Stuart Earle, a Partner at Eversheds Sutherland who chaired the SPP event, echoed the severity of the crisis. "We are moving ever closer to the original State Pension Age of the early 1900’s (70) and as Sir Steve highlighted the ticking time bomb of inadequate pension saving is probably worse than the government and others think," he stated.
A Historical Perspective on Pensions
The event also provided deep historical context. Phil Warner from Dalriada Trustees took attendees on a journey from the Chatham Chest of the 1500s and the Poor Laws, to the Old Age Pensions Act of 1908. This first state pension was non-contributory, only payable from age 70 and to those deemed "of good character".
Warner explained the creation of the modern State Pension in the 1940s, initially payable at age 60 for women and 65 for men. The 1959 National Insurance Act saw state and occupational pensions interact, before being formally separated again by the 2014 Pensions Act. Warner concluded, "...it's simpler for state and occupational schemes to remain separate, no matter how much they influence each other."
Other speakers, including Rebecca Howard from Pinsent Masons LLP, provided technical overviews on topics like Guaranteed Minimum Pensions (GMP) and bridging pensions. The consensus from the gathering of experts was clear: tampering with the Triple Lock foundation poses a profound risk to the financial security of millions of Britons in their later years.
