For years, there have been headlines that the triple lock could, or should, be scrapped.
In 2016, the Work and Pensions Committee said the triple lock would worsen an economy already heavily skewed towards baby boomers and against millennials, and that it should be scrapped.
Seven years later, debate over the triple lock continues.
In September, the Institute for Fiscal Studies said the guarantee had led to the state pension rising by 60 per cent in cash terms between 2010 and 2023, compared with prices rising by 42 per cent and earnings by 40 per cent.
So, is it a matter of time before the triple lock is reviewed?
Despite the political difficulties in doing so, Aegon UK pensions director Steven Cameron says the state pension triple lock will need to be reviewed some time after the general election.
“We’ve heard mixed noises from political parties on the future of the triple lock after the election, but we support retaining some commitment to both price and earnings inflation alongside a minimum guarantee,” Cameron adds.
“Rather than a three-way comparison year on year, we’d recommend looking over a three-year period, which could smooth out excessive volatility and offer a way forward all stakeholders would accept as fair.”
Paul Waters, head of DC markets at consultancy Hymans Robertson, agrees that the triple lock should be reviewed, but “not for the reasons many people might think”.
“Attention is focused on the short-term pension increase rates the triple lock creates, particularly in times of economic volatility,” Waters says.
“Comparisons are then drawn against other immediate economic measures and conclusions drawn around the fairness of the triple lock, such as the IFS stating that the UK state pension has risen by 50 per cent more than earnings between 2010 and 2023. Such assessment and commentary misses the point.
“The UK state pension is starting from a low base, when measured at an absolute level and by comparison to other countries. The triple lock may be a clumsy design developed like Frankenstein’s monster from successive ad hoc policy decisions, but it is playing a role in addressing the retirement income inadequacy issue.”
Citing research published in March 2022 by the House of Commons Library, Waters highlights how the UK ranked 30th out of 37 OECD countries analysed, with state pension making up a higher proportion of pensioner income in most OECD countries.
“You might argue this shows the success of our occupational and private pension provision, but we do not have confidence in that as we move into an environment where more people rely on DC provision,” he adds.
The UK also devotes a smaller percentage of its gross domestic product to state pensions and pensioner benefits than most other advanced economies.
