Europe

Rishi Sunak warned over ‘damaging’ consequences of scrapping triple lock on pensions

State pension freeze: Lord Jones raises issue of ‘unfairness’

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Chancellor Rishi Sunak is considering axing the triple lock on state pensions as the Treasury looks to tighten purse strings following record spending during the pandemic. The Tories made a manifesto commitment in 2019 to raise pensions by 2.5 percent, the rate of inflation, or average earnings, whichever is highest.

Forecasts suggest under the triple lock pledge, pensions could rise by up to eight percent or around £746 by next April – sending alarm bell ringing in Government.

However, the charity Independent Age has called on the Treasury to maintain its commitment and claimed pensioner poverty is already as high as it has been since 2008.

Morgan Vine, head of policy and influencing at Independent Age, insisted the UK pension is also considerably worse than other major nations and financial insecurity has risen during the pandemic.

She told Express.co.uk: “The triple lock serves a vital role in protecting the state pension. Currently, older people in our country are on the receiving end of one of the least generous pensions in the developed world, according to the Organisation for Economic Co-operation and Development (OECD)

“Our own analysis at Independent Age revealed that whilst poverty in the general population has remained broadly stable, pensioner poverty is at its highest level since 2008, at 18 percent, and has been rising steadily since 2012.

“We regularly hear from older people worried about how they will afford to put food on the table or to heat their homes, and in a recent survey, almost one in four said they were feeling more financially insecure because of the pandemic.”

A recent report by the OECD found the UK has a net replacement rate of 28.4 percent – meaning an individuals’ state pension is around a quarter of what they would earn during working life.

The figure is below the OECD average of 58.6 percent and the EU average of 63.5 percent.

Ms Vine claimed scrapping the triple lock would also have a detrimental effect on the ability for younger people to save for retirement.

She added: “Scrapping the triple lock would not just affect those in later life, research from the Pensions Policy Institute found that scrapping it would double the amount that a low-paid young worker has to save to avoid poverty in old age.

“Ending the triple lock now would not just unfairly affect pensioners during a time of increased hardship, it would damage younger generation’s ability to save for their retirement.”

The triple lock was established by the Tory-Liberal Democrat coalition Government in 2010 and has remained in place ever since.

The coronavirus pandemic has significantly changed the economic landscape and seen public debt and borrowing reach post-war records.

The Government borrowed almost £300billion in the 2020-21 financial year and national debt soared to more than £2.2trillion.

More than 11 million people were supported by the furlough scheme, with the taxpayer covering 80 percent of wages up to £2,500.

The job support scheme and other fiscal policies, such as quantitative easing, has contributed to a rise in inflation and triggered artificial wage growth.

Downing Street has this week confirmed pensions are “under review”.

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Prime Minister’s official spokesman said: “We’ve got to ensure fairness for both pensioners and taxpayers.

“The Chancellor has said previously that the triple lock is Government policy.

“But we’ll recognise people’s concerns. We will obviously keep figures and numbers under review, as we always do, and take any decisions at the appropriate time.”

Work and Pensions Secretary Therese Coffey said on Wednesday: “We’ll be looking at what is happening with earnings and that’ll guide us on what happens on the pensions rise given to pensioners next year.

“I know we need to be driven by the data.”
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