The value of the triple-lock,


There can be no better news for those in or approaching retirement than David Cameron’s election pledge yesterday to keep the triple lock on the Basic State Pension.

He promised pensions would continue to rise in line with wages, prices, or by 2.5% – whichever is highest – during the 2015-2020 parliamentary term.

Indeed Cameron stated that protecting pensions was the “first plank of the next general election manifesto”

The triple lock was introduced by the coalition and means that, since 2010, many pensions have risen by about £15 per week overall. Chancellor George Osborne announced in his Autumn Statement that the state pension age would increase to 68 in the mid – 2030s and to 69 in the late 2040s.

To give you an idea of the value of this increase, let’s do a little Maths. £15 pw is £480 pa. To provide the promise of a fully indexed pension at today’s state retirement age would cost (should you purchase an annuity) around £14,000.

But that promise hasn’t just been made to those in retirement, it has been made to every one of us too young to receive a basic state pension as those increases are now baked in to our entitlements.

And lest anyone have a go at Cameron for being a toffee nosed Etonian smug git(which he is), let’s remember that the £15 pw represents a huge benefit to those on low retirement incomes. At a time when the average DC pot at retirement is £28,000, the increase (not the pension itself) is worth half of Joe or Joan Blogg’s personal pension savings.

Frankly the benefit of what Cameron’s saying should outweigh any personal prejudices (and living in Eton as I do, I have a few!).

The basic state pension is a universal benefit (we all share in it) but it’s the benefit that matters most to those on welfare, those who could not save and those for whom their pension savings, for whatever reason, have failed them.

No doubt, as I type, Michael Johnson is locked in his (ivory) tower, working out just what the cost to the Treasury of this promise would be. I have here to take my hat off to Michael in his campaign for a superior state pension. I suspect that though he claims to have nothing to do with Cameron’s decision making, his (benign) influence is at work here. One day, Con Keating , Kevin Wesbroom and I will kidnap Michael and re-educate him, I suspect there is a decent man lurking beneath his wolf’s clothing.

I am really thrilled by this promise. No doubt it will spark concern in Labour and Liberal party think-tanks, but it seems a no-brainer to me for Webb and McClymont to confirm their support for the triple-lock.

The Basic State Pension was marginalised by successive Governments for thirty years, from the start of the Thatcher era to the administration of Gordon Brown. It was allowed to fall behind the cost of living for pensioners till it had reached a level that Michael Portillo could dismiss it as “nugatory”.

And yet it is at the heart of the benefit system brought in by Beveridge and one of the few certainties that people enjoy in retirement (death and taxes being the others that spring to mind).

Pound for pound , the basic state pension is the most efficient way of paying a retirement income we know of. The apparatus needed to pay or to claim works well and politically it is a benefit that brings the nation together. What is there not to like about the basic state pension?

That we are restoring it to its rightful place as the bedrock of our retirement benefits is impotent too to second tier pensions- those we receive from the workplace. The guarantee of a state benefit worth having, allows us to think of our workplace savings as investments. A strong state pension paid to a level that provides us all with the certainty of self-sufficiency, is something we can aspire to. If it provides us with the comfort that we will be spared destitution, perhaps it will also inspire us to be more ambitious with the management of our voluntary savings.

No doubt there will be many commentators who will sneer at this promise of Cameron’s. I will not be one of them.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to The value of the triple-lock,

  1. Stuart says:

    Impotent, or important? 😉

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