15billion reasons the pension triple lock can’t be guaranteed

THE Prime Minister yesterday refused to promise that the Government’s pension ‘triple lock’ will continue.

Theresa May would not say whether pensions will rise by at least 2.5 per cent each year after the General Election.

Pensions have risen faster than earnings in recent years and older people’s incomes have overtaken those of working families.

The triple lock, which was introduced by former prime minister David Cameron, guarantees that state provisions will increase in line with inflation, average earnings or 2.5 per cent – whichever is higher.

The Institute for Fiscal Studies think-tank said in 2015 that the triple lock would add £15billion to state pension costs by 2050, compared to rises based on earnings growth alone.

But asked yesterday whether older people would see their pensions continue to grow if she wins at the polls in June, Mrs May simply said that OAPs were already better off under the Conservatives.

Ending the triple lock would be a popular move among many senior Tories. Earlier this year, MP George Freeman – Mrs May’s policy chief – warned that the guarantee ‘can’t go on’ at the current level.

Chancellor Philip Hammond has also ordered a review into whether it is affordable.

Former Tory cabinet minister David Willetts was among those calling for the triple lock to be re-examined. Lord Willetts, now chairman of the Resolution Foundation think-tank, said: ‘Of course there has to be some kind of framework for increasing the state pension.

‘But the triple lock is a powerful ratchet pushing up pensions at a time when incomes of less affluent working households are barely rising.’

He added: ‘I actually think pensioners worry about their kids and grandchildren.

‘They don’t want to live in a society where all the big increases in incomes are accruing to pensioners and other groups are being left behind.’

The Office for Budget Responsibility projects that spending on state pensions in 2016-17 will total £91.6billion, with 12.9million recipients paid an average of £7,100 each.

That would represent around 12 per cent of total public spending, and is equivalent to £3,300 per household. Andrew Murrison, another former Tory minister, has also joined calls for the triple lock to be ‘phased out’.

Dr Murrison said ending the scheme would release an extra £2.1billion by 2020, which could be redirected to the NHS.

A Resolution Foundation study, As Time Goes By, charted income changes across different generations over the past half century.

It found that typical pensioner households are now £20 a week better off than working age ones, after houshold costs. Elderly spending power has been boosted by a wave of pensioners who tend to still be in work, own a home and have generous pension pots.

Last week, before the election was called, Labour launched a pensioners’ pledge card, which included a promise to keep the triple lock on state pensions until 2025.

‘Other groups are left behind’