Peers call for removal of triple lock on UK state pension
A committee of peers in the House of Lords has called for the removal of the triple lock on the UK state pension, saying keeping it active indefinitely was unsustainable.
In a report published today, entitled Tackling Intergenerational Unfairness, the Select Committee on Intergenerational Fairness and Provision called for the measure to be withdrawn.
The triple lock was a mechanism introduced by the UK’s coalition government of 2010-15. Its application means the state pension must be raised annually according to whichever was highest of wages, inflation or 2.5%.
Each of the main political parties pledged to maintain the triple lock before the snap election of 2017, although the ruling Conservative party proposed to scrap the 2.5% lower limit after 2020. However, following its poorer-than-expected showing at the polls, the party was forced to abandon this idea in order to secure parliamentary support from Northern Ireland’s DUP.
The select committee’s report today said that as pensioners’ incomes had been brought back in line with those of working people, according to an inquiry by the House of Commons Work and Pensions Committee, it was no longer needed.
“The triple lock for the state pension should be removed,” the report said. “The state pension should be uprated in line with average earnings to ensure parity with working people. However, there should be protection against any unusually high periods of inflation in the future.”
The move follows similar calls made by the OECD in October 2017. At the time, the institution said: “Indexing the state pension solely to average earnings would be fairer, while it would still allow pensioners to benefit from improvements in living standards.”
‘Important first step’
John Taylor, president-elect at the Institute and Faculty of Actuaries (IFoA), said the institution supported the peers’ recommendation.
“The introduction of the new state pension in 2016 restored the level of the state pension in relation to wages and means that the triple lock should no longer be necessary,” he said.
The peers’ report said that maintaining the triple lock indefinitely would be unsustainable, something echoed by Frank Field, an MP who represented Labour at the 2017 election but is now independent. Field, chair of the Work and Pensions Committee in the lower house of parliament, told the Lords that he still supported this notion, but was quoted as being “worried about its political ramifications”.
Taylor at the IFoA said: “It should now be a priority to ensure the state pension remains sustainable and affordable over the long term. Removing the triple lock would be an important first step in ensuring the sustainability of the state pension for future generations.”
The peers’ report called on the Treasury to generate and publish data on intergenerational fairness. It also recommended the government create intergenerational impact assessments for all draft legislation indicating how it will affect different generations.