The future of the state pension triple lock is looking bleak as experts claim the scheme could be scrapped due to its “enormous and growing” cost.
Many analysts have warned that the policy may only last several more years before the cost becomes too high for the public purse.
The triple lock ensures state pension payments increase each year, in line with the highest of either 2.5 per cent, the rise in average earnings or inflation.
According to Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, the scheme must be reviewed as part of talks about older Brits’ work and income.
The triple lock ensures that state pension payments increase each year
Joe Giddens
She appeared before the Work and Pensions Committee after John Cridland, who previously reviewed the state pension age in 2017.
“In Cridland’s review of state pension age in 2017, he said there would come a point where the triple lock had done its job in raising state pension but that its continued existence would become unfair on younger taxpayers and force further increases in state pension age– has this tipping point been reached?” she said.
“It’s also important to say state pension and the age at which it is set is not the whole issue.
“It’s all part of a much larger conversation, not just of state pension, but of how we help older workers to remain engaged in the workforce.
“People often can’t do the same jobs in their 70s as they did in their 50s but that doesn’t mean there shouldn’t be a role for them.”
Legislation is in place for the state pension age to rise from 66 to 67 and then 68 over the coming years.
Another review into the state pension age is expected to be published this year – many believe the age increase will be brought forward.
With a 10.1 per cent increase due this April, the full basic state pension will increase from £141.85 a week to £156.20 a week.
Experts warn that the scheme could be scrapped when costs get too high
Dominic Lipinski
Those on the full new state pension will see their payments increase from £185.15 a week to £203.85 a week.
Morrissey added that older employees shouldn’t be forced out of work because they have other responsibilities such as caring for a family member.
She said: “By exiting the workforce employers are missing out on enormous experience that could be used to mentor younger workers and pass information on, whereas redesigning roles and allowing more flexibility could keep this experience in the workforce.
“It’s an enormous shift for employers that Cridland compared to having to consider policies around maternity and paternity leave and pay and it’s one that should be grasped sooner rather than later.”