The former Pensions Minister Ros Altmann believes a government guarantee that state pension will rise each year by at least 2.5% should be dropped from 2020.
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Since 2010, the “triple-lock” policy has meant that pensions rise by the inflation rate, average earnings or 2.5%, whichever is highest.
On Sunday she said she had argued for alterations to the policy, but former Prime Minister David Cameron had blocked the change for political reasons.
Baronness Altmann revealed that she had suggested in a memo to ex-Prime Minister David Cameron that the policy should be scrapped.
However, spokesman for Number 10 said: “The manifesto contains a commitment to protect the triple lock”.
“The cost of the triple lock on the public finances from 2020 onwards is enormous”.
“The triple lock is a political construct, a totemic policy that is easy for politicians to trumpet, but from a pure policy perspective keeping it forever doesn’t make sense”, Lady Altmann added. “That’s the extent of the distance we’ve still got to travel and that’s what the triple lock is about”.
“Absolutely we must protect pensioner incomes, but the 2.5 percent bit doesn’t make sense”, Altmann told the Observer. “And if you reduce it to a double lock you save billions of pounds”.
‘Politically, nobody had the courage to stand up and say we have done what we needed to do’.
The triple lock had “fulfilled its purpose” and pensioner households were now “no more likely to be poor than other age groups”, she said.
‘A balance always needs to be struck between protecting the standard of living of pensioners, and not over-burdening taxpayers.
It came amid reports that the Department for Work and Pensions was refusing to rule out a review of the policy in the coming months. In 1994/95 pensioners typically lived on an income that was 38% less than the typical worker, but by 2014/15 this gap had reduced to just 7%.
There are now around 13 million people in the United Kingdom receive the state pension.
Carl Emmerson, deputy director of the IFS, said that the highs and lows of the United Kingdom economy would mean that the state pension would logically grow faster than earnings in general over the longer term.
However, research by our sister website Moneywise found that more than half of people (55 per cent) don’t understand how the new state pension works. And it would also help keep the costs of providing the state pension more manageable. Women’s state pension age will level off with men at 65 by 2018.
SNP MP Ian Blackford renewed calls for a full independent pensions review to investigate existing inequalities and the impact of new initiatives like the Lifetime ISA following the “downgrading of the pensions brief”; Richard Harrington was made Under Secretary of State for Pensions last week, the most junior of ministerial positions.
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“However, as the cost of providing it continues to increase and the government comes under financial pressures from elsewhere, it will be hard for the triple lock to continue in its current guise”.
