Each and every state pensioner would be impacted – with the Labour Party government urged to act by Neil Record.
DWP could scrap perk for all state pensioners that ‘feels morally unsustainable’
The Department for Work and Pensions has been told to scrap the “mess” of a Triple Lock – with ALL state pensioners warned. Each and every state pensioner would be impacted – with the Labour Party government urged to act by Neil Record.
The ex-Bank of England economist said: “Our state pension system is a mess. It is a huge burden on the taxpayer – £147bn this financial year – and famously uses a formula, the “triple lock”, to increase payments every April in a way that is complicated, impossible to control and is actually designed to reward pensioners more generously than the workers paying them.”
Record went on, adding: “In the 14 years since the triple lock came into full operation (2012-2013), average earnings have risen at a rate of 3.3pc per year – but the state pension, benefitting from the triple lock, has risen by 4pc per year.
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“This 0.7 percentage point per year uplift may not sound much, but without the triple lock and just relying on average earnings, today’s state pension would be £208.65 per week rather than the current £230.25.
“So pensioners have done better than workers to the tune of 10.3pc over the past 14 years. This feels morally and financially unsustainable.”
He told the Telegraph: “Of the 14 years since it took effect, in five of those years the annual uprating has been based on average earnings, five years on CPI, and four on the 2.5pc minimum.
“For every one of the five years that average earnings have been used as the uprating index, later revisions mean that the uprating no longer matched the actual earnings increase.”
The UK state pension increases in April each year based on a system known as the triple lock.
Introduced in 2011 by the coalition government, it guarantees that the basic and new state pensions will rise by whichever of three figures is the highest:
Inflation, based on the consumer price inflation (CPI) figure for September of the previous yearThe average increase in wages during the May to July period of the previous year