A new report from the Resolution Foundation has urged the Labour government and the Department for Work and Pensions (DWP) to scrap the state pension Triple Lock. The thinktank proposes replacing it with a "smooth earnings link" from next year, which would save £650 million annually by the end of the Parliament.
Triple Lock Replacement Proposal
The Triple Lock, introduced under the coalition government of the Conservatives and Liberal Democrats, guarantees that the state pension rises by the highest of inflation, average earnings growth, or 2.5%. The Resolution Foundation argues that this policy has become far more expensive than originally planned and less effective at reducing poverty. Instead, a smoothed earnings link would align pension increases with the living standards of the rest of society.
According to the report, released on Wednesday, June 10, the savings from scrapping the Triple Lock could double the funding for the Youth Guarantee, helping address the NEETs crisis affecting over one million young people not in employment, education, or training.
Expert Opinion
Ruth Curtice, Chief Executive of the Resolution Foundation, stated: "The pensions Triple Lock is a terribly designed policy that has proven to be far more expensive than originally planned, far less effective at reducing poverty than many hoped, and risks causing further economic harm if it continues for much longer. The most sensible way to keep the State Pension rising in line with the living standards of the rest of society is through a smoothed earnings link, rather than a random ratchet."
She added: "Doing this next year would save £650 million a year by the end of the Parliament – enough to double the current support to help the one million young people not in employment, education or training back into work. We cannot afford to keep this policy for another Parliament. The Government should call time on the Triple Lock as soon as possible, and put the savings from doing so to far better use."
Political Context
The thinktank also recommends that, at the very least, the current Pensions Commission should set a target State Pension level after which the Triple Lock is no longer needed. This aligns with recent comments from former Labour Prime Minister Tony Blair, who called for an end to the "unsustainable" policy.
A DWP spokesperson responded: "Supporting pensioners is a priority and we have committed to the triple lock for the rest of this parliament. The Pensions Commission is examining how we can ensure secure retirements for tomorrow’s pensioners, while our newly passed Pension Schemes Act will bring about major reform to the UK pensions system, benefiting millions of workers to the tune of up to £29,000 by the time they retire."
