Labour leader Jeremy Corbyn has pledged to keep the triple lock if his party is elected.
Speaking at the Labour Party Conference today, 26 September, Corbyn said the party owes it to the older generation to rebuild Britain “so you too have peace of mind and dignity”.
“We will fulfil that obligation with the triple lock on pensions protected along with the winter fuel allowance, a free bus pass and a national health and care service that can look after you and your families with respect. That is solidarity between the generations.”
Keeping the triple lock would mean the state pension will continue to rise in line with the highest of earnings, inflation or 2.5 per cent.
Commenting, AJ Bell senior analyst Tom Selby said: “It is hard to put a price on the state pension triple-lock because its value depends on the performance of the wider economy, and specifically earnings and prices levels.
“What we do know is that the amount of the state pension increased by 22.2 per cent between 2010 and 2016, compared to earnings growth of 7.6 per cent and CPI inflation of 12.3 per cent over the same period.
“If the triple-lock is retained over the longer-term the costs could spiral, with estimates from the independent Office for Budget Responsibility suggesting extra spending of £35bn in today’s terms if the triple-lock is retained by 2060/61, versus £15bn under earnings indexation only.
Furthermore, he said it is hard to politically justify increasing the retirement incomes of baby boomers at a faster rate than younger generations – especially when it is younger generations’ taxes that ultimately fund the guarantee.
“There is also a legitimate question about whether increasing the state pension at random intervals – which is essentially what the triple-lock does - is really sensible policymaking. If Jeremy Corbyn thinks the state pension level is too low, surely it would make more sense to simply raise the payment to a level he thinks is fair, and then peg that amount to earnings or prices, or both.
“As Labour kicks into election mode it seems inevitable Labour will look to weaponise issues surrounding older people. In particular, the fact life expectancy improvements have stalled in the UK in recent years – coupled with plans to accelerate the rise in the state pension age to 68 - could be political dynamite for Corbyn and his Labour colleagues.”