Triple lock state pension safeguard ‘under threat’
24 November 2016
The triple lock safeguard on state pensions could be under threat after 2020, it has been suggested.
The mechanism guarantees that the state pension rises by a certain level - which means it increases annually by the highest of average wages, inflation, or 2.5%.
But pension experts said Chancellor Philip Hammond's Autumn Statement gave a signal that while the triple lock is safe for now, it may not be immune from cuts in the longer term.
Mr Hammond said: "We will meet our pledge to our country's pensioners through the triple lock.
"But as we look ahead to the next Parliament, we will need to ensure we tackle the challenges of rising longevity and fiscal sustainability.
"And so the Government will review public spending priorities and other commitments for the next Parliament in light of the evolving fiscal position at the next Spending Review."
Baroness Altmann, a former pensions minister, said: “The Chancellor’s speech signalled pretty clearly that the state pension triple lock is only safe until 2020.”
She continued: “I would like to see a double lock announced, whereby state pensions would rise in line with either earnings or prices.”
A report from the Commons Work and Pensions Committee recently said the triple lock is “inherently unsustainable” and should be scrapped. The committee said the triple lock should not continue beyond 2020.
Nici Audhlam-Gardiner, managing director at Saga Investment Services, said: “It looks as though 2020 could see the end of the triple lock and maybe more as the Chancellor indicated he would be looking at the cost of an ageing society in the next Parliament.”
Jon Greer, a pension expert at Old Mutual Wealth, said: “Given the multiple calls for the triple lock to be scrapped, Philip Hammond had little choice but to address it in his statement.
“He has opted for a measured approach, by confirming it is in place in the short term, but adding that it will be looked at. While the removal of the triple lock is politically toxic, it is fiscally unsustainable and logical that it be removed eventually. However, it needs to be undone with careful thought.”
The Government is also planning a crackdown on pensions scams, including banning businesses from cold calling someone about their pension. This includes scammers targeting people who inadvertently “opt-in” to receiving third party communications.
Cold callers often present scams as “unique investment opportunities”, such as putting money into a new hotel in an exotic location or into “ethical” projects that promise too-good-to-be-true returns.
It is hoped the crackdown will help bring an end to the misery caused by the 250 million scam calls – the equivalent of eight a second – made in the UK every year.
Photo from Lauren Hurley / PA Wire