State pension: Axing triple-lock has 'minimal savings and would hit poorest hardest'

The lock means the state pension increases by the highest of 2.5 per cent, wages or inflation each year.

Labour has pledged to keep the triple lock in place until 2025, while Prime Minister Theresa May has so far refused to rule out scrapping it.

Earlier this year, the Commons Work and Pensions Committee recommended axing the guarantee, as it had served its purpose.

The group of MPs said the state pension age would have to rise above life expectancy in parts of the country if payouts keeps rising in line with the triple lock.

However, analysis has showed that the cost of increases to Government are minimal, following the reform of state pensions last year.

The triple-lock has given pensioners only an extra £2 a week, but it would be low income recipients who would suffer the most if it was removed, according to pension consultancy Hymans Robertson.

The basic state pension is currently £122.30 per week and would only be £120.26 if it had risen in line with the highest of inflation or earnings – a so-called double-lock – over the past seven years.

If income had only increased in line with inflation since 2009 it would currently be at £115.28 a week, found Hymans Robertson.

Compared to the double lock, the triple lock has cost the Government around £2billion over seven years, which compared to £8billion of savings to come from the move to the flat-rate pension.

Furthermore, given future expectations of inflation, the triple-lock is unlikely to have a signifiant cost impact on the state over the next Parliament, said Hyamns Robertson.

Partner at the firm, Chris Noon, said: “If the triple lock was removed and replaced by a double lock policy it would be based on a need for short-term cashflow rather than thoughtful policy decision-making.

“It would also impact the lowest paid most as they rely more, and sometimes solely, on the state pension.

“Its value will simply erode over time significantly reducing the cash they have to live on.

“This was the section of the population that was most negatively affected by the changes introduced with the new state pension, so removing the triple lock would be a major blow for them.”

Daily Express :: Personal Finance Feed


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