The triple lock pledges to increase the value of the state pension by the highest of average earnings growth, inflation or 2.5% each year.
Reports suggest both Labour and the Conservatives will re-commit to the policy in their respective manifestos for the upcoming general election.
Experts say maintaining the triple locks is the safest option ‘politically’, but risks stifling debate about the future of the pension.
Tom Selby, director of public policy at AJ Bell, said: “Given how critical the votes of older people are to winning a general election, it is no surprise both the Conservatives and Labour appear to be taking a safety-first approach to the triple lock. The policy has become a totem for ‘doing right by pensioners’, with debate over the state pension often restricted solely to politicians’ commitment to increasing the benefit by the highest of average earnings growth, inflation or 2.5%.
“While the policy is understandably popular, it remains entirely aimless, with neither major party clearly stating how much they believe the state pension should be worth. As the real value of the state pension rises as a result of the triple lock, it also increases the likelihood of planned state pension age hikes being accelerated to balance the books, creating both uncertainty and the potential for intergenerational unfairness.”
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AJ Bell takes the view that the next Government needs to set a clear plan for the pension, both in terms of what a ‘fair’ value is, perhaps as a proportion of average earnings, and the length of time retirees should be in receipt of it on average.
The investment firm said there should also be a review of exactly how pension increases are applied in light of the dramatic fluctuations in both inflation and earnings we have seen since the pandemic.
Selby added: “For this necessary reform to happen, politicians will need to show bravery and step beyond the current ‘Will they? Won’t they?’ debate over the triple lock. The state pension remains the bedrock upon which people’s retirement plans are built, so embedding at least some certainty into the system is crucial to help Brits plan with confidence.
“Given how politically charged debates over the state pension can be, an independent commission will likely be necessary to build cross-party support and deliver reforms that stand the test of time.”
