Should the triple lock pension pledge be made everlasting? Two in 5 suppose it ought to…

Two in five people strongly support the state pension triple lock and think it should be made permanent, new research reveals.

The popular pledge means the state pension should increase every year by the highest of inflation, average earnings growth or 2.5 per cent.

More than two thirds of people aged 62 and over favour keeping this policy for good, though backing for that is much less staunch among younger generations.

Nevertheless, 14 per cent of 18 to 29-year-olds and 22 per cent of 30 to 45-year-olds regard the triple lock as essential and would like to see it set in stone.

Some 37 per cent of 46 to 61-year-old are also on board with that, according to a new survey by AJ Bell.

The current Government has promised to keep raising the state pension – currently worth £241.30 if you qualify for the full flat rate – in line with the triple lock for the whole of this parliament.

Although it remains unlikely that any of the main political parties would go into an election with a manifesto promise to ditch the triple lock, the promise has added £12billion to the cost of the state pension since its introduction in 2011.

‘Politicians of all stripes remain steadfastly wedded to the state pension triple lock, despite growing criticism of the cost of the pledge and the potential intergenerational unfairness it is baking into the system,’ says Tom Selby, director of public policy at AJ Bell.

‘The reason is almost certainly cold political calculus. A significant section of the public support the triple lock, particularly older voters, and any party indicating it will not pledge allegiance to the policy risks being annihilated at the general election.’

AJ Bell’s nationally representative survey of 2,000 UK adults found 38 per cent want the triple lock made permanent, while a further 24 per cent are more ambivalent – they support it but think it will have to end at some point.

Some 17 per cent said they didn’t know, 15 per cent had no strong view, and 6 per cent believe it is unfair or unaffordable and should be scrapped at the earliest opportunity.

Desire to ditch the triple lock entirely was low across all age groups, peaking at around one in ten at the highest among people who are 45 and under.

But younger people were more likely to be lukewarm, with 32 per cent of those aged 18 to 29 saying they supported it to some extent but it would need to go eventually.

Some 26 per cent of 30 to 45-year-olds and 24 per cent of 46 to 61-year-olds expressed this more middle ground sentiment.

The Institute for Fiscal Studies has suggested moving to the Australian system of a ‘smoothed earnings link’ after the next election.

It argues the triple lock is costly, difficult to forecast over the long term, and disproportionately beneficial to better off people who tend to live longer.

The trade-off between the state pension age and annual increases is likely to come under greater scrutiny in future, because raising the age is under review. 

Hiking it to offset the cost of the triple lock would be disadvantageous to the poorest pensioners who have lower life expectancy.

Selby says: ‘Despite 4 in 10 Brits supporting making the triple-lock permanent, this is highly unlikely to be pursued by any government.

‘The natural long-term result of such a move would be that, eventually, the state pension would reach and then exceed average earnings in the UK – an outcome that would clearly not be affordable.

‘The fact young people are much less in favour of the triple-lock than their older counterparts may reflect the reality that the longer it is in place, the more likely the state pension age will need to rise further and faster than under current plans.

‘There are two main levers available to control costs: the amount people receive from the state in retirement and the age at which they receive it. If you can’t pull the “amount” lever, then the only option left is the age – a shift that would only impact younger generations.’

Selby says to change the triple lock the starting point needs to be setting out what it aims to achieve and establishing a path to reach that goal, then you could shift to either a single or double lock to earnings and/or inflation.

But he believes there is a strong argument for smoothing out these measures over time to avoid unpredictable spikes.

‘This would at least provide a degree of stability, giving people a better idea of what the state will provide and from when, and what they need to build up for themselves to fund the retirement they want.

‘But that first step of acknowledging the triple lock simply cannot exist forever may be the hardest.’