Thoughts on the triple lock

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There’s no doubt that the unwinding of the furlough presents the Treasury with a technical problem with the triple lock. You can read the details here

But that does not mean that the pensions industry can consider the state pension the tap which can be turned off to safeguard private and public pension privileges. With pensions as with COVID we are all in this together. We cannot dump on pensioners the problems of a flawed pension saving system.

I woke to Petrie Hoskins at 4am , announcing that she would be spending the next hour of her phone in discussing the Pension Triple Lock. At 7 am Jo Cumbo discussed the triple-lock with Nick Ferrari on LBC.


Clearly something is afoot and it looks likely that the manifesto pledge to retain the triple lock is being reconsidered.Whether it is suspended or abolished, it looks as if the benign climate in which the state pension has grown over the past decade is in for a change of temperature,

If so, I am worried.

Nobody wanted to talk with Petrie about the impact of the triple lock, I almost phoned in myself. The state pension, along with pension credit,provides a  way for many older people to get some financial independence. For those who do not have private savings or the benefit of an occupational pension, the triple lock has meant that the state pension has moved from “nugatory” (Michael Portillo’s descriptor) to something paying up to £173.75 pw increasing by 3.9% recently.

The system is complicated by changes to the state pension introduced under the coalition Government that mean that many older people get pension credits to top up a lower entitlement to state pension and these “pension credits” do not always get claimed.

Department for Work and Pensions figures show an estimated £2.2 billion of available Pension Credit went unclaimed in 2017/2018.  On average this amounted to more than £2,000 per year for each family entitled to receive Pension Credit who did not claim.  Official figures show that Pension Credit take up was similar for those under 75 (62%) and those 75 and over (61%) but was lowest among pensioner couples – with just over half of those entitled received the benefit.

There is real pensioner poverty in the UK and it results from a pension system which works well for those who are enjoying the benefits of a tax-privileged workplace pension system and not so well for people who are had to save for themselves or not save at all.

Kicking away the crutch of the triple lock, without properly reforming the taxation of workplace pensions, would be socially regressive. I accept that the £290bn that COVID-19 looks like costing the Exchequer this year needs to be found from somewhere, but starting with the pension poor is not sending the right signals.

The pensioner has not been shielded from COVID-19. If you read the article published on this blog yesterday by distinguished actuaries, it is clear that the opposite was true.

Economically, the old have not benefited from the main recipients of the £290bn of state aid. They have not been furloughed nor have they participated in business support. They have suffered the consequences of years of under-funding of our elderly care syste,

It now looks likely that they will be asked to accede to a u-turn in Government policy.

I hope that the Treasury will look at state funding of retirement incomes holistically , recognizing the huge inequalities that exist. They should not focus on any one item to the exclusion of any other. The main items HMT should be looking at are

  1. The long term implications of current state pension promises (of which the triple lock is only a part)
  2. The taxation system that is supposed to incentivise workplace and private pensions.
  3. The cost of Government guaranteed pensions to public sector employees
  4. The (self) exclusion of the self-employed from funded pensions.

In my opinion, the state pension , pension credits and surrounding benefits provide too weak a safety net for the poor pensioner, the taxation system (including the egregious net pay anomaly) is not properly incentivising saving and has become a safe harbor for otherwise taxable wealth. I do not think that we can continue to fund all state backed defined benefit pensions and we need to look at future promises sector by sector. Finally, I think it time Government makes a meaningful contribution mechanism available to the self employed through the tax and national insurance system , a system from which the self-employed can choose to opt out.

There’s no doubt that the triple lock was never built to meet the explosive consequences of the unwinding of the furlough on wage inflation. But this is a technical issue and shouln’t be confused with the strategic importance of dealing fairly with our older citizens.

Demonising the cost of the triple lock where there are such inequalities elsewhere is short-sighted and unfair. I hope that as well as the voices of the Treasury, the voices of those who stand up for poor pensioners (such as Age UK, Ros Altmann and our pensions minister) will be heard today and tomorrow.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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