The state pension triple lock formula could be amended, even if politicians commit to the policy in their election campaigners, a pension expert has warned.
The Conservative Party is set to commit to the state pension triple lock in their manifesto this year, it was reported last night.
The state pension will increase by 8.5 per cent in April under the triple lock
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Steven Cameron, Director of Pensions at Aegon said while the triple lock may be “appealing” to voters, “intergenerational fairness must be a long-term consideration”.
He added: “Even if parties do commit to a triple lock approach, there are strong arguments for revisiting the exact formula to make sure the increases it produces are more predictable.
“For example, rather than looking at inflation or earnings growth over 12 months, some form of averaging over a longer period might produce results fairer for all.”
The pensions expert said pensioners would be “hopeful” both parties confirm the rumours in their pre-election manifestos, but warned the policy has proven “very costly” in recent years.
The triple lock has produced record increases to the state pension because of “highly volatile economic conditions and spikes in both price inflation and earnings growth,” he said, adding: “But it’s also a hugely popular policy with many pensioners heavily or indeed solely reliant on their state pension to live off in later years.”
Aegon research found 96 per cent of workers in the UK expect to rely on the state pension to some extent in retirement.
Mr Cameron said while the triple lock may be “appealing” to voters, “intergenerational fairness must be a long-term consideration”.
He added: “State pension clarity is key but all parties need to make sure they’ve properly counted the costs.
“Politicians and individuals alike will be hoping that the period of skyrocketing inflation is past.
“This may make it more sustainable, although we must remember it’s paid for out of the National Insurance contributions of today’s workers, not out of some magic pot of money.”
The state pension is set to rise by 8.5 per cent in April, having increased by 10.1 per cent last year.
The triple lock is a commitment that the state pension rises annually by the highest out of inflation, earnings or 2.5 per cent.