Call for triple-lock on pensions to end
Under-40s face rise in retirement age
The state pension age should increase to 68 by 2039 and the triple lock should be scrapped in the next Parliament, a review recommends.
The Government has committed to maintaining the lock, which ensures the state pension increases in line with the higher of inflation, earnings, or 2.5 per cent.
THE STATE pension age should increase to 68 by 2039 and the triple lock guarantee should be scrapped during the next Parliament, an independent review recommends.
The Government has committed to maintaining the triple lock, which ensures the state pension increases in line with the higher of inflation, earnings, or 2.5 per cent, throughout the current Parliament. But the report said: “We recommend that the triple lock is withdrawn in the next Parliament.”
Former CBI director general John Cridland, the Government’s independent reviewer, said the state pension age should increase from 67 to 68 between 2037 and 2039.
Experts said the report would be “particularly unwelcome” for the under-40s, as they face their state pension age being pushed back a year.
Those in their 30s and younger may have to wait until they are 70 to draw a state pension.
The state pension age is already due to go up in stages, with a rise to 67 by 2028. The next increase to 68 is not due to happen until between 2044 and 2046.
But the review said the rise to 68 should happen seven years earlier than planned, providing greater “intergenerational fairness”, and helping the fiscal sustainability of the state pension.
The report, which focuses on state pension age arrangements beyond 2028, will help inform the Government’s review of the state pension age, due in May.
Tom McPhail, head of retirement policy at Hargreaves Lansdown, said the report “looks like the death knell” for the state pension triple lock.
But Sir Steve Webb, a former pensions minister who is now director of policy at Royal London, warned that the Government should not set policy on the basis of today’s well-off pensioners.
He said: “Many people retiring in years to come will have very modest private pensions and the state pension will be of vital importance to them. We should be careful not to base policy for decades in the future on the basis of the incomes of people retiring now.”
Mr Cridland’s report said the state pension is a “pay as you go” system – meaning today’s workers pay for today’s pensioners.
Today, there are 305 pensioners for every thousand people of working age, going up to 357 per thousand by 2050.
Nearly £100bn per year is currently spent by the Government on the state pension and pensioner benefits. Projections suggest an additional one per cent of GDP will need to be spent on the state pension by 2036-37.
The report said if the same rise in spending was faced today, this would be equivalent to a rise in taxation of £725 per household per year. Recommendations include: People over state pension age should be able to draw down part of their state pension if they want to, leaving the balance to benefit from the deferral arrangements. This could benefit those wanting to work part-time.
Statutory carers’ leave should be introduced to help those with caring responsibilities.
A “mid-life MOT” should be introduced to encourage people to take stock, and make realistic choices about work, health and retirement.
TUC general secretary Frances O’Grady said: “Hiking up the state pension age will hit low-paid workers the hardest. And it will punish those who become too sick to work.”
Baroness Altmann, a former pensions minister, said she would like people to be able to get their state pension earlier if they were ill or started work very young “in tough industrial jobs, and genuinely cannot keep going till nearly 70.”
Work and Pensions Secretary Damian Green said: “As Government goes about making its decision on the future state pension age in May of this year, these contributions and recommendations will provide important insight.”
It looks like the death-knell for the state pension triple lock Tom McPhail head of retirement policy at Hargreaves Lansdown