The triple lock is used to decide how much the state pension increases by every year – but a think tank has called for it to be axed
A think tank set up by Sir Tony Blair has called for the state pension triple lock to be scrapped and replaced with a new fund.
The triple lock is used to decide how much the state pension increases by every year. Each April, the state pension rises based on whichever is highest out of earnings growth in between May to July, inflation in September, or 2.5%.
This year, the state pension increased by 4.8% in line with wage growth. The triple lock was introduced by the coalition Government in 2010 and first implemented for the 2011/12 financial year.
However, a report by the Tony Blair Institute (TBI) has called for the triple lock to be axed and said the state pension is “outdated, increasingly unaffordable, and too rigid for the way people live and work”.
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TBI wants the state pension to be replaced with a new “lifespan fund” that would allow people to access their retirement funds earlier in life.
If someone does tap into their fund early, they would then automatically enrolled into higher National Insurance contributions when they return to work.
The fund would provide up to 20 years of support through activities including work, caring and study.
Tom Smith, director of economic policy at the TBI said: “Britain’s state pension system was built for a different era. We can’t keep pouring money into a system that is increasingly unaffordable.
“Pension spending must be contained, and that means the triple lock cannot continue after the next election.
“Ending it will require political leadership from all parties – but that should only be the first step. Real reform must also build a better system: one that is fairer, more flexible, and designed for how people live today.”
Caroline Abrahams, charity director at Age UK, said the triple lock should be retained into the next parliament, arguing it has helped to improve the living standards of some of the poorest pensioners.
She added: “We continue to hear from older people who are struggling financially, and the extra money the triple lock delivers makes a meaningful difference to many lives.
“In new polling, three in 10 pensioners say they are struggling financially – even before the worrying rise in energy prices.
“Going forward, we need a national debate to determine the purpose and appropriate value of the state pension as, at present, it is set too low to provide those reliant on it with a decent standard of living throughout their later lives.”
A Department for Work and Pensions ( DWP ) spokesperson said: “Supporting pensioners is a priority and our commitment to the triple lock for the rest of this Parliament means millions of pensioners will see their yearly state pension rise by up to £2,100.
“The Pensions Commission is already examining how we can ensure secure retirements for tomorrow’s pensioners and for those that have not reached state pension age but need extra support, a range of options such as universal credit and other means-tested and disability-related benefits are available.”
