Should we block the triple lock?

 

Ros Altmann speaks out (shock!)

We now have three former  pension ministers making a lot more noise than our current pension minister.

  1. Ros Altmann who we are now realising never should have done the jog
  2. Steve Webb who should be doing the job
  3. Gregg McClymont who had he been put on, to have proved most royally.

Baroness Altmann is fresh to the ranks but she’s lost no time in becoming pension spokesperson for well- er…Ros Altmann. Frankly , I’m more than happy to have Webb, McClymont and Altmann as our “Not Pension Policy Think Tank”. We have the strongest “non-ministerial pension team” in the world, and it’s entirely cross-party!

So here’s Ros at  7am on a Sunday morning speaking to Radio 5 live

We should have a double not a triple lock. She’d like to take away the 2.5% guarantee on pensions increase that she now calls a “political gimmick”. She points out that the triple lock hasn’t applied to other pension benefits such as S2P/SERPS and the pension credit.

She is right of course that the 2.5% doesn’t relate to anything and she’s also right in saying that this extra fillip to our future pensions has allowed us to catch up with where our state pension should be.

The impact of the triple lock , in a deflationary environment, means that the state pension could bankrupt the Government’s capacity to achieve other goals.

Altmann only wants the triple lock to be blocked from 2020 (the extent of the current promise).

Altmann has not discussed with Theresa May, but says the new Prime Minister “knows her views”. Altmann is challenging May to have the courage to take on this “deep seated issue” and to stop “hiding behind the triple lock” as a way of pacifying us wrinklies.


The triple lock impacts State Pension Age

Ros is of course absolutely entitled to raise this issue and raise this issue now. She has every right to speak out not just for pensioners but for pensions in general and anyone who has read the latest Quinquennial Review of the National Insurance Fund, can be in no doubt that we cannot afford to continue with the triple lock without  substantial grants to the DWP from the Treasury.

Unless of course we accelerate the increase in the State Pension Age.


Transparency = Honesty

This blog talks a lot about transparency, in Government transparency can be simplified to “honesty”. We have all the data that we need to analyse the cost of the triple lock in any number of economic scenarios and – of course- in all these scenarios , we could afford to prioritise real increases in older people’s pensions.

But it would be dishonest to rationalise the triple lock as anything other than robbing Peter to pay Paul.

Just as Ros Altmann was holding forth on Radio Five Live, Paul Lewis was tweeting

Ending state pension triple lock ‘obvious alternative’ to tax credit cuts said PMs new adviser http://goo.gl/V4sYDe  cost £6bn, can’t last

In the Sunday Times article Paul promotes,   Nick Timothy, the prime minister’s new joint chief of staff, is reported saying the “obvious alternative” to welfare cuts was to tackle the triple lock, which raises the state pension for 13m people by whichever is the highest: the growth in wages, inflation, or 2.5%.

nick timothy

Nick Timothy

Downing Street said this weekend that the lock had been a manifesto pledge and “that commitment still stands”. However, it leaves open the possibility of the Conservatives ending the lock at the 2020 election.


MAY we have honesty

The characteristic of the May supremacy that is most obvious is its brutal candour. I was critical on this blog about the way in which the Hinkley Point decision was postponed, but I couldn’t but be impressed by the leaked reports that this was because May did not like the idea.

At this time , with no obvious leadership elsewhere, May’s autocratic style may be the only way through the muddle.

May be be harsh, insensitive and frankly not very pleasant, but I would give up the soft values in return for some good honest decision making and some sensible policy.

The debate about the Triple Lock may be as simple as Paul Lewis, Ros Altmann and Nick Timothy make it sound. 2020 may be the natural break point for that weird 2.5% kicker.

But before we throw out the Triple Lock, let’s be honest about what stands upon the platform of the New State Pension system, that’s a pension taxation system that is grotesquely unfair to the poor.

triple lock22

My triple lock


Savers – just getting by

For me, the price of abolishing the triple lock – which helps the poorest most, is to make private pensions work better for that demographic.

That’s the issue which May must face up to , if she wants to fulfill her commitment to helping those saving for their retirement and “just getting by”.

triple lock2

Locks are very popular

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in pensions and tagged , , , , , , , , , , . Bookmark the permalink.

5 Responses to Should we block the triple lock?

  1. Peter D Beattie says:

    OK Henry you and Ros have had your say about abolishing Triple-Lock. But you seem quite happy to let impoverished state pensioners sink further into the mire and perhaps have to bring ‘begging bowls’ to government, probably to get ignored again, rather than have empathy for the pensioner status! It would be more helpful if you ‘so called experts’ could come up with a viable plan rather than being always negative in your comments. Its obvious that government should be rejigging NI/taxation to solve this problem. After all us pensioners are only asking for ‘fair dos’ after paying for it all our working lives!

    Peter D Beattie – State and FAS/PPF Pensioner (Military Veteran RAFA)
    Pensiontheft Group

    Liked by 1 person

  2. Con Keating says:

    Abolishing the lock or any element of it would hardly be consistent with May’s stated views on inequality.

    Like

  3. Meech, Colin says:

    A government with its own central bank can never go bankrupt austerity is a political choice as is borrowing money from profit making banks

    Sent from my BlackBerry 10 smartphone on the EE network.

    Like

  4. Supporting the triple lock is, as Steve Webb said this morning, supporting acceleration at an incredibly modest pace (in certain woeful economic circumstances) the “catching up” that the dismally inadequate basic state pension needs to do, for millions who will never be entitled to the single tier. It is about reducing inequality and making sure money gets to those who need it. Our research (http://dx.doi.org/10.1017/S0144686X15000690) showed that fully 39% of pensioners have incomes above the poverty line only because of state pension and means tested benefit transfers, and for a further approximately 7 per cent of men and women, their incomes were above the poverty line only because they or their partners were in receipt of disability-related benefits (mainly AA and/or DLA) – intended to compensate of course for the extra costs of disability [and btw, under threat]. Add to that the percentage that are in poverty (we found 30% of women and 22% of men over 65) and we deduce that only 24 per cent of women and 33 per cent of men over 65 would avoid official poverty without transfers from the state.
    Does anyone want to go back to the 1990s when pensioner poverty reached over a third of our older population? Has anyone spent time with and spoken to pensioners who are living from hand to mouth? Or those currently watching their life savings of £10,000 produce no interest and being drawn down for emergencies with increasing levels of stress? We need not to demonise older people and we need some proper context for this debate.
    Tax it off the rich if you think they get too much. You know I’m a supporter of universal benefits and progressive taxation, and so I shall remain.

    Liked by 1 person

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