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State pension triple-lock should be scrapped, say MPs State pension triple-lock should be scrapped, say MPs
(about 9 hours later)
The "triple-lock" on state pensions - which has protected the incomes of the older generation since 2010 - should be scrapped, a committee of MPs has said.The "triple-lock" on state pensions - which has protected the incomes of the older generation since 2010 - should be scrapped, a committee of MPs has said.
The triple-lock guarantees that pensions rise by the same as average earnings, the consumer prices index or 2.5%, whichever is the highest.The triple-lock guarantees that pensions rise by the same as average earnings, the consumer prices index or 2.5%, whichever is the highest.
But MPs on the Work and Pensions Committee say that continuing with it would be "unfair and unsustainable".But MPs on the Work and Pensions Committee say that continuing with it would be "unfair and unsustainable".
The government said it was committed to the triple-lock until 2020 at least.The government said it was committed to the triple-lock until 2020 at least.
As a result of the policy, the state pension has risen by a relatively generous £1,100 since 2010, with an increase of 2.9% in April this year.As a result of the policy, the state pension has risen by a relatively generous £1,100 since 2010, with an increase of 2.9% in April this year.
But the MPs said that while pensioners had done well out of the triple-lock, young people had suffered unfairly.But the MPs said that while pensioners had done well out of the triple-lock, young people had suffered unfairly.
"At the same time as tightening their belts, they are being asked to support a group that has fared relatively well in recent years," said Frank Field, the chair of the committee."At the same time as tightening their belts, they are being asked to support a group that has fared relatively well in recent years," said Frank Field, the chair of the committee.
"Millennials face being the first generation to be poorer than their forebears.""Millennials face being the first generation to be poorer than their forebears."
'Unsustainable''Unsustainable'
However the government has consistently argued that pensioner income needed to be given a boost, after years of falling behind.However the government has consistently argued that pensioner income needed to be given a boost, after years of falling behind.
Historically, pensions were linked to inflation rather than earnings, which reduced pensioner incomes relative to those of the working population.Historically, pensions were linked to inflation rather than earnings, which reduced pensioner incomes relative to those of the working population.
A spokesperson for the Department of Work and Pensions said: "We want to ensure economic security for people at every stage of their life, including retirement. We are committed to the triple lock which is protecting the incomes of millions of pensioners."A spokesperson for the Department of Work and Pensions said: "We want to ensure economic security for people at every stage of their life, including retirement. We are committed to the triple lock which is protecting the incomes of millions of pensioners."
However the MPs said the rising cost of the state pension - £98bn in the last tax year - was also unsustainable.However the MPs said the rising cost of the state pension - £98bn in the last tax year - was also unsustainable.
"It is time for the triple-lock to be shelved," said Mr Field."It is time for the triple-lock to be shelved," said Mr Field.
ReplacementReplacement
To replace it, the MPs are proposing to link pensions only to earnings - but with greater generosity if inflation is higher.To replace it, the MPs are proposing to link pensions only to earnings - but with greater generosity if inflation is higher.
They recommend that in 2020, when the triple-lock ends, there should be a benchmark for the State Pension, depending on its level at that time.They recommend that in 2020, when the triple-lock ends, there should be a benchmark for the State Pension, depending on its level at that time.
Currently the new state pension is worth £155 a week, which represents 24% of average earnings.Currently the new state pension is worth £155 a week, which represents 24% of average earnings.
In other words, the pension benchmark would be around a quarter of earnings.In other words, the pension benchmark would be around a quarter of earnings.
The amount paid out could not fall below this initial sum.The amount paid out could not fall below this initial sum.
If inflation was higher than the increase in earnings, the pension would rise by more than earnings, so protecting the benchmark.If inflation was higher than the increase in earnings, the pension would rise by more than earnings, so protecting the benchmark.
In periods when earnings are rising faster than inflation, the pension would be only gradually up-rated to the benchmark.In periods when earnings are rising faster than inflation, the pension would be only gradually up-rated to the benchmark.
At such times the pension might therefore fall below the benchmark, but it would be restored over time.At such times the pension might therefore fall below the benchmark, but it would be restored over time.
Are you concerned your state pension may be affected if the "triple-lock" is scrapped? Or do you think young people have suffered unfairly? You can share your comments by emailing haveyoursay@bbc.co.uk.
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