Tue. Oct 3rd, 2023


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Triple lock pension under threat – again – unless retirement age is raised

3 min read

The Institute for Fiscal Studies estimates keeping the triple lock in place could add £45bn a year to public spending by 2050.

The think-tank claims such levels of spending would produce “insurmountable pressure” for a “much higher” state pension age.

IFS economist Heidi Karjalainen said: “The triple lock makes it especially hard to know how much you might receive from a state pension and how much the state pension will cost the state in the future.

“An additional real risk is that retaining the triple lock for too long increases state pension spending so significantly that it leads to insurmountable pressure for a much higher state pension age.

“This would particularly affect people with poorer health who struggle to remain in employment until they reach state pension age.”

Keeping the lock would put pensions at between £10,900 to £13,400 a year, in today’s terms, over the same period, the IFS estimated.

The pledge means pensions rise every April in line with the highest of wage growth, price inflation or 2.5 percent.

Wage growth figures released on Tuesday are expected to be used to calculate next year’s rise.

Jan Shortt, the general secretary of the National Pensioners Convention campaign, said: “We get tired of being presented as taking out of the economy when we have paid our dues in work and still contribute around £160bn to the Treasury.”

She added: “That will increase over time as more pensioners are asked to pay tax due to the freeze on the tax threshold.”

Caroline Abrahams, the charity ­director at Age UK, said: “Keeping the triple lock is essential because it’s the Government policy that arguably does more than anything else to ­protect older people on low incomes from financial hardship at a time of inflation, particularly those who rely on the state pension.

“Without the triple lock this year the state pension would have ­suffered a devastating real terms cut.

“The cost-of-living crisis hasn’t gone away and prices for everyday items are substantially higher than they were a year or two ago.”

Dennis Reed, the director of pressure group Silver Voices, called the ­findings “absolute poppycock” and hit out at the IFS for its “scare stories”.

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He added: “Raising the state ­pension age further could only be contemplated if life expectancy starts rising again and employers are stopped from ‘letting go’ workers in their 50s and 60s.” A Department for Work and Pensions spokesman said: “The Government is committed to the triple lock.

“The Secretary of State will conduct his statutory annual review of benefits and state pensions in the autumn, using the most recent prices and earnings indices available.”

In April, a 10.1 percent rise linked to inflation pushed up payments for pensioners retiring after April 2016 to £203.85 per week; the old basic state pension went up to £156.20.

The IFS said earnings growth will likely determine next April’s rise as it is likely to be higher than inflation.

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