The policy delivered a 4.1 percent boost to state pension payments this April
Labour may soon be forced to reconsider its commitment to the triple lock as state pension costs continue to increase. The policy ensures state pension rates go up each April, in line with the highest of 2.5 percent, average earnings growth or inflation.
Thanks to the policy, pensioners received a 4.1 percent increase in their payments in April. Labour has committed to the policy for the remainder of this Parliament, but there are doubts about whether they will uphold this promise.
Harry Fenner, entrepreneur and former CEO of Navana Property Group, said: “For years, the triple lock on pensions has been touted as sacrosanct, a promise no Government dares break. But with soaring inflation and a cost of living crisis strangling public finances, it’s clear the current system is no longer sustainable.”
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He condemned Keir Starmer’s “stubborn” commitment to the metric as “dangerously out of touch”. The entrepreneur said that despite Labour’s assurances that it will stick with the triple lock, ministers will “almost certainly be forced to reconsider”.
Mr Fenner warned that while the triple lock has been beneficial for state pensioners, it could potentially bankrupt the welfare state if trends continue, or force the Government to make “brutal cuts” in other areas to continue funding it.
The entrepreneur proposed two alternatives to the triple lock that the Government could consider to keep the state pension affordable. He said: “A fairer, more sustainable system must link pension rises to average earnings growth alone.
“This balances protecting pensioners’ living standards with fiscal responsibility. Alternatively, a triple lock modified to cap increases during economic downturns could work.”
Recent OBR predictions suggest the cost of the state pension could rise to £15.5billion by the 2029-2030 tax year, three times previous projections. Steven Cameron, pensions director at Aegon, shared his view on the future of the policy.
He said: “Figures such as those from the OBR make assumptions around the future and show that under the triple lock, the state pension could represent an increasingly high proportion of overall Government expenditure. This means any Government may have to decide whether to spend finite resources on triple lock increases or on something else.”
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But policymakers have to consider several issues when looking to alter the triple lock. Mr Cameron said: “The state pension is paid for out of tax and National Insurance (NI) receipts of working age individuals, so there’s a need to look at what’s intergenerationally fair and sustainable.
“Any decision to make changes in this Parliament or beyond will be highly political, but could become increasingly inevitable.” The full new state pension currently stands at £230.25 a week. You typically need 35 years of NI contributions to qualify for the full amount.