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State pension triple-lock should be scrapped, say MPs State pension triple-lock should be scrapped, say MPs
(35 minutes 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 price 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". The Work and Pensions Committee said continuing with it was "unsustainable" and "unfair" on younger families.
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.
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.
"Millennials face being the first generation to be poorer than their forebears."
'Unsustainable'
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.
As a result of triple-lock policy, the state pension has risen by a relatively generous £1,100 since 2010, with an increase of 2.9% in April this year.
'Unsustainable'
However, MPs said that while pensioners had done well out of the triple-lock, young people and working-age families had suffered unfairly.
So-called Millennials, born between 1981 and 2000, face being the first generation in modern times to be financially worse off than their predecessors, they added.
MPs said the rising cost of the state pension - £98bn in the last tax year - was now unsustainable.
Instead of the triple-lock, they say the new state pension and basic state pension could be linked simply to average earnings.
They say a formula should also be included to protect pensioners during periods when earnings lag behind price inflation.
In those periods, pensioners would get an above-earnings increase so that their purchasing power did not decline.
The report said there was a "trade-off" between increasing the amount of state pension that people get and setting the age at which people receive it.
Simply increasing the state pension age risked further disadvantaging people who may already be worse off and have lower life expectancies.
Labour MP Frank Field, the chairman of the committee, said that at the same time as tightening their belts, young people were being asked to support a group that has "fared relatively well in recent years".
"They've accepted that unfairness so that we could largely eliminate pensioner poverty," he told the BBC.
"Fairness now means that the pendulum swings back in favour of working families, so they do not continue to have cuts - real cuts - in living standards, while we further advance the interests of pensioners."
'Phoney conflict'
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. Dot Gibson, general secretary of the National Pensioners Convention, said pensioners were "being blamed for the problems faced by today's younger generations".
"It is time for the triple-lock to be shelved," said Mr Field. "This phoney conflict is being used as a smokescreen in order to cut back on the welfare state," she said.
Replacement "The housing crisis hasn't been caused by pensioners but because in Britain we sold off council houses, we haven't been building enough affordable homes, wages and employment are low and insecure and an economy built on house-price inflation simply cannot be sustained.
To replace it, the MPs are proposing to link pensions only to earnings - but with greater generosity if inflation is higher. "This is what needs to be addressed."
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.
In other words, the pension benchmark would be around a quarter of earnings.
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.
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.
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.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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