Keeping ‘triple lock’ could mean no state pension for millions
The ‘triple lock’ guarantees the state pension will rise annually by whichever is highest out of inflation, earnings growth or 2.5%.
However, a report published by the Work and Pensions Committee said to fund the guarantee, the state pension age may need to rise to 70.5 years by 2060.
This is above the male life expectancy in many parts of England and Scotland including 62 of the 133 areas of Glasgow, according to the research by the Institute for Fiscal Studies (IFS) on behalf of the Committee.
Male life expectancy is below 70.5 in 26 parts of England, with the lowest being 67.5 years in the centre of Blackpool.
Frank Field MP, Chair of the Committee, said: “With the triple lock in place the only way state pension expenditure can be made sustainable is to keep raising the state pension age. This has the effect of excluding ever more people from the state pension altogether. Such people will disproportionately be from more deprived areas and manual occupations, while those benefitting most will be the relatively prosperous.
“By 2020 the state pension will be at a level where it will provide a decent minimum income for people in retirement to underpin private saving, and any savings they have will be kept on top of, not clawed back from, the state pension. The triple lock will have done its job and it will be time therefore to retire it.”
In November, the Committee called for the triple lock to be scrapped from 2020 and replaced with ‘a smoothed earnings link’ which would benchmark the state pension to a fixed proportion of average earnings.
The IFS estimates this would save 0.8% of GDP a year by 2060 compared with the triple lock, or £15bn in today’s money.
Chancellor Philip Hammond has committed to keeping the triple lock to until at least 2020.