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Why we should keep the triple lock guarantee on pensions

Why we should keep the triple lock guarantee on pensions

The Work and Pensions Select Committee has published a new report on Intergenerational Fairness.

Later Life Ambitions is particularly pleased that the committee has taken the evidence we submitted into account, saying on page 38Age UK and Later Life Ambitions, a campaigning group, warned that many pensioner households on low incomes might not apply for a means tested WFP. Around one third of households entitled to mean tested Pension Credit do not claim it.” And on page 43Later Life Ambitions told us: No two generations have the same experience–technology, the vagaries of history, changing economic circumstances all shape a generation’s experience. Nobody would advocate rationing for today’s children because it would only be fair to those who were children during the Second World War any more than they would suggest students who enjoyed grants in the 1960s return them to the state as a courtesy to young people paying student fees.”

However, we strongly disagree with the Committee’s recommendation to scrap the triple lock guarantee for pensions. We do not believe that removing the triple lock guarantee would ease the current situation for young people. Frank Field MP, the chair of the committee, said “Home ownership, taken as a given by many in my generation, is out of reach for too many aspiring young people today … at the same time as tightening their belts, they are being asked to support a group that has fared relatively well in recent years.” However, the older generation is not responsible for younger generations being unable to buy homes, this is down to the lack of affordable housing being built nor are all pensioners well off.

The triple lock is a guarantee to increase the state pensions, every year by the higher of inflation, average earnings or a minimum of 2.5% and was introduced to make sure that pensioner income was not eroded by the gradual increase in the costs of living. The Work and Pensions Select Committee said that continuing with it was “unsustainable” and “unfair” on younger families. They think it would be better if the new state pension and basic state pensions were linked to average earnings with a formula included to protect pensioners during periods where earnings lag behind inflation. Many pensioners still need the triple lock guarantee to ensure that their standard of living is safeguarded and we are worried that these changes would not be enough to do so.

We agree with Steve Webb, former Pensions Minister who commented on the report saying that the triple lock was created to reverse “30 years of decline in the value of the state pension” and “that job is not yet done. The UK still has one of the lowest state pensions in Europe.” We would therefore call on the Government to reject these recommendations and for all political parties to maintain the commitment to the triple lock.

Later Life Ambitions is committed to addressing intergenerational fairness, but we feel that removing the triple lock guarantee will do very little to benefit the younger generations but instead have a huge impact on pensioners. Instead we would call on the Government and all political parties to look at building more affordable homes and looking at ways to increase wages and employment which will help to benefit every generation.

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