This summer has seen a half-hearted debate over what to do with the triple lock.
For those unfamiliar, the triple lock means the value of the state pension must rise each year in line with the highest of three figures: goods and services inflation; wage inflation; or by 2.5%.
Brought in under the coalition government to appease older voters, for years critics have warned this policy was prone to failure. Well, here we are. Due to the bounce back in wages post-lockdown, the triple lock dictates the state pension should rise by a colossal 8.8%.
This week, the government seems to have come to the conclusion many predicted. They’re going to fudge it, waiving the triple lock for one year before returning to it the year after.
Most seem satisfied with this. A YouGov poll suggested all age groups support the triple lock. This seems surprising, no? Let’s take a look at it. They asked:
“Would you support keeping this rule in place, or scrapping the rule and having the government decide each year the amount it wants to change the state pension by?”
This is a false dichotomy. The government is not the only possible source of an alternative figure, and with public trust in the government negligible, it’s no wonder respondents chose to limit its power.
It would be a waste if the debate ended here. This summer we’ve stared straight in the face of a terrible policy and decided we can’t think of anything better.
But there are alternatives. A means-tested state pension would be more equitable, more empowering and more cost-effective.
Let’s start with a question: Should Lord [Alan] Sugar get a state pension of £10,000 a year?
I would hope most would answer no. He’s said it himself, he’s a billionaire, he doesn’t want or need free pensioners perks.
Now, there aren’t many Alan Sugars, but it sets an interesting precedent. There are some people who have such huge volumes of wealth that it is ridiculous for them to receive money from the state.
How rich are we talking? £100 million, £10 million, maybe less? This is a matter for debate, but with an aging population and skyrocketing covid debt we should embrace equitable policies that save the state money.
Nevertheless, this will have angered some of you. “No fair”, shout rich boomers, “I paid in”. But this ‘philosophy’, created by the insidious national insurance tax, isn’t borne out by the current policy. You are given a pension even if you never ‘paid in’ through state pension credits that provide £177.10 a week, only £2.50 less than the full state pension.
For commentators who defend the triple lock, this is exactly the issue; the UK’s state pension is too low. The UK has the lowest state pension out of all 36 countries in the OECD.
But this is misleading. Britain’s pensioners make use of non-state pensions far more than their overseas counterparts, through a combination of private pensions, workplace pensions and enviable final salary schemes.
There is a group of pensioners essentially receiving ‘double bubble’, while the less well-off make do with an inadequate state pension, kept low because it is universal and therefore costly. A means-tested solution would go some way to resolving this pension inequality.
Despite this, many will still take umbrage if their state pension is reduced. Whether it’s fair or not, some will grumble that they’ve planned on a certain income, and taking it away puts them out. This is why the policy should be phased in over a period of at least 10 years and communicated clearly to avoid another ‘Back to 60’ fiasco.
Settling for a fudged triple lock shows a lack of imagination, across the spectrum of Britain’s political class. I believe a means-tested state pension is the best way forward, but there are hundreds of alternatives. The state pension could become opt-in for the better off, or richer pensioners could be encouraged to donate their state pension to the NHS or to charity.
Let’s hear these ideas. We must start imagining policy that creates a better tomorrow.