Lords urge govt to scrap triple lock

The government should consider scrapping the triple lock for state pensions in favour of uprating the state pension in line with average earnings, a House of Lords committee has said.

The Select Committee on Intergenerational Fairness and Provision urged the removal of the triple lock, but highlighted that there would need to be contingencies in place to protect against “any usually high periods of inflation in the future”.

In its report, Tackling intergenerational unfairness, the committee also noted that the Work and Pensions Select Committee (WPC) had suggested that maintaining the triple lock indefinitely was “unsustainable”.

Although the WPC chair, Frank Field MP, said that he agreed with this conclusion, he was worried about its “political ramifications”.

The TaxPayers’ Alliance told the intergenerational fairness committee that it was “egregiously unfair” that the state pension was rising at such a fast pace “at a time of spending restrictions on young people”.

The pressure group suggested that, as there was public spending deficit, the state pension rises were being paid for by future generations, and urged the government to freeze the state pension.

The Select Committee on Intergenerational Fairness and Provision concluded that, although there was a case for spending restraint, “it does not seem fair for people reliant on the state pension to fall behind working people”.

It continued: “Nor on the other hand is it fair for them to have their incomes lifted at a faster rate than that experienced by working people.”

The House of Lords committee also criticised the National Insurance (NI) system, specifically that NI contributions do not pay for the state pension, despite being used as a way to determine eligibility for it.

Its report stated: “The reality of longer working lives should prompt the government to rethink the NI system.

“It is not fair that only individuals under the state pension age pay this tax. Individuals over the state pension age should contribute.

“Older people with lower incomes could be protected from this change by aligning the NI contributions threshold for this group with the income tax personal allowance.”

Commenting on the report, committee chair, Lord True, said: "We found that intergenerational bonds are still strong, and the evidence suggested both young and older people recognise the contribution the other makes and the challenges they face.

“However, there is a risk that those connections could be undermined if the government does not get a grip on key issues such as access to housing, secure employment and fairness in tax and benefits."

    Share Story:

Recent Stories

A time for fixed income
Francesca Fabrizi discusses fixed income trends and opportunities with Goldman Sachs Asset Management Head of UK Pensions Solutions, Fixed Income Portfolio Management, Henry Hughes, in our Pensions Age video interview

Purposeful run-on
Laura Blows discusses purposeful run-on for DB schemes with Isio director, actuarial and consulting, Matt Brown, in Pensions Age’s latest video interview
Find out more about Purposeful Run On

Keeping on track
In the latest Pensions Age podcast, Sophie Smith talks to Pensions Dashboards Programme (PDP) principal, Chris Curry, about the latest pensions dashboards developments, and the work still needed to stay on track
Building investments in a DC world
In the latest Pensions Age podcast, Sophie Smith talks to USS Investment Management’s head of investment product management, Naomi Clark, about the USS’ DC investments and its journey into private markets