Chancellor urged to scrap triple lock to recoup Covid-19 financial losses

The Chancellor, Rishi Sunak, has been urged to scrap the state pension triple lock to try and regain some of the government’s financial losses resulting from the Covid-19 pandemic.

The Telegraph reported that it had seen a Treasury document, dated 5 May 2020, that advised Sunak to scrap the annual state pension rise guarantee to recoup some of the money the government had spent on supporting workers and the economy.

The document forecast that the crisis will cost the Treasury around £300bn this year, and also urged the Chancellor to consider increasing income tax and putting a two-year pay freeze on public sector workers, according to the Telegraph.

Currently, the triple lock guarantees that the state pension will rise by at least 2.5 per cent each year if that is higher than earnings growth or price inflation.

In the build up to the most recent election, the Conservative manifesto had promised it would not scrap the triple lock.

However, the document reportedly said that it would be “very difficult” to recover Covid-19 spending without measures such as the scrapping of the triple lock and raising taxes.

Commenting, Aegon pensions director, Steven Cameron, said: “The fall out for the nation’s finances of the coronavirus will be significant, and spending priorities for the future may also be different from the past. So, it’s only right that the Treasury is beginning to think about what it needs to do to put the country’s finances back on a steady footing.

“It’s no surprise to see policies perceived by some as overly generous for certain groups on the list of expenditures that could be reduced. The state pension triple lock and the tax relief granted to higher earners on their pension contributions are two such policies which now look to be in the spotlight.

“We’d encourage the government not to rush through changes and to think about the long-term implications of this type of reform.

“The logistics of changes to pension tax relief for example are fraught with complexity such as how it would be applied to defined benefit pensions. And it will be vital that changes which focus on particular age groups such as state pensions are not only fair but perceived as fair by the wider population.”

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