Chancellor Rachel Reeves has appeared to guarantee the future of the state pension triple lock for the rest of the Parliament.
Speaking to the Treasury Select Committee (TSC) on Wednesday, Ms Reeves was asked if she would rule out the move of the state pension to a single lock, to which she replied “yes”.
The news will come as a relief to state pensioners whose triple lock guarantee appeared to be under threat amid rife speculation of it being scrapped.
Since the triple lock was introduced in 2011 the cost of state pensions has surged well beyond original projections.
According to the Office for Budget Responsibility (OBR), by 2029–30 the extra cost due to the triple lock will be around £15.5billion per year, nearly three times the forecast made at the time of introduction.
The Institute for Fiscal Studies (IFS) estimates that the extra annual spending on pensions introduced by the triple lock is already about £11billion more per year than if pensions had simply been linked to inflation or earnings.
The triple lock is a UK government policy that guarantees the State Pension increases each year by whichever of the following is highest:
- the rate of inflation (CPI),
- average earnings growth, or
- a minimum rise of 2.5 per cent
Its purpose is to protect pensioners’ incomes by ensuring their pension keeps pace with the cost of living or general wage levels.
On Monday, MPs debated pensioner poverty in the UK, with the triple lock coming under fire, being blamed for the Government’s growing spending on welfare, and making the state pension no longer sustainable for future generations.
Sir Edward Leigh, the Conservative MP for Gainsborough, said: “I am very grateful to the Minister to be in receipt of the triple lock, but it is not an effective way of tackling pensioner poverty and it is bankrupting the country.
“I am sorry not to be party political, but can we not have a consensus between the parties that we should phase out the triple lock, concentrate resources on pensioners in real poverty and have an agreement on dealing with benefits generally to get people back into work? We should work together.”
In response, Pensions Minister Torsten Bell said: “I am always keen to work together with the Father of the House.
“He mentions the triple lock, but we are doing far more things to tackle pensioner poverty.
Rachel Reeves in front of the Treasury Select Committee
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Parliament TV
A ‘single lock’ policy, which had been proposed as a replacement to the triple lock, could’ve seen a policy linked to earnings growth – rather than the current three-pronged rule introduced by the Tories and Liberal Democrats coalition government.
Steven Cameron, Director of Pensions at Aegon, said: “If the triple lock is left as is, over time, state pensioners will get higher increases than average wage growth. That lacks intergenerational fairness and it’s not sustainable.”
Kemi Badenoch has said the Tories would look at means testing.
“It’s something that we don’t do properly here.” Ms Badenoch said.
“We don’t have a system that knows who should get what. That’s the sort of thing that we should be looking at.”
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