There is some research from IFS published last year (I’ll come to it) that says that the triple lock helps the rich and raising the state pension age (to 68 and upwards from there) hurts the poorest most.
This is backed up by FT research from Jonathan Guthrie he published yesterday
I cannot do more than present the links to the IFS and FT research but this comment to Jonathan’s post shows how in sync they are
Here is that research for readers who have time to understand the question
The key statement that heads this report is
The UK state pension system faces significant challenges given the country’s ageing population, but at the same time it is crucial for retirement finances: state pensions make up on average almost half of income for recently retired households. Reforms coming into force in 2010 and 2016 have increased universality, and most future pensioners will receive a full (flat rate) state pension.
Policy-makers seeking to limit the cost of the system have two obvious options: raising the state pension age or limiting increases in the value of the pension.
The current indexation method known as the ‘triple lock’ increases the value of the state pension over time but to an uncertain degree and only in times of macroeconomic turmoil. Among other reasons, differences in life expectancy mean raising the state pension age disproportionately affects poorer people. This is in contrast to limiting indexation which affects those on higher incomes more.
Jonathan Guthrie’s FT article looks more closely at Dr Morrison’s struggle to come to terms with “fair” when it comes to revising how the state pension is paid. We cannot but pity her and we can see why she has a separate project from the Pension Commission (2).
The observation that the triple lock is widening the gap between the lucky few (I am one) who benefit from deferred gratification and the triple lock and the unlucky many (who need their pension earlier) is new to me.
Addendum
It is hugely important in private pensions too, the FCA’s research in how those with small workplace pots cash out as soon as they can , contrasts with the whingeing of the rich who use their workplace pots to help their successors pay the inheritance tax as their last gift when they die.
The poor need their (state) pension now, the rich want more and can wait.
“Whingeing” – really, Henry, you seem to wish to alienate those who can help to narrow the have-have not divide.
This has been an issue for decades, and the pension industry’s solution is to invent a new money tree concept, which repeats the failure of the last fad.
Jam tomorrow AUM celebrated and rules when what is required is productivity and dignity beyond work for all. Caring for those incapable of providing for themselves
Be careful with what you wish for, comrade.
When Andrew Smithers says that the US market is 160% overvalued and the UK DB market lost £600bn, do you really believe the surplus argument?
Canada’s wake-up call was well expressed last week in Davos.
“The old order is not coming back,” Carney said. “Nostalgia is not a strategy.”
“Instead, countries need to reduce “the leverage that enables coercion” by diversifying their trade partners, reducing their strategic dependencies — and by banding together.”
The report was published yesterday. Summary from Synergy Study Group discussion:
https://publications.parliament.uk/pa/ld5901/ldselect/ldeconaf/250/250.pdf
Summary:
The report contains a good number of recommendations to the Government, many of which reference the lack of finalised support and legislation covering these reforms. It recommends that, unless clarity is available before 6 April 2026, then, these changes should be pushed back. In addition, it sees that the Pensions Dashboard needs to be fully implemented to ensure that Personal Representatives (PRs) can easily access all the scheme details needed to process the estate efficiently.
One of the biggest concerns with regards to IHT for both pensions and the BPR/APR reforms is with regards to payment deadlines with the view of the need to extend these from six to twelve months as it appears unreasonable, at least initially, for the usual deadline to be met. It is suggested that this can be reviewed once bedded in but, as the changes are significant, pension schemes and providers should be given time to ensure their systems can cope with the tight deadlines needed to avoid penalties on the PRs.
There are also a number of recommendations with regards to timescales in pension schemes, not being feasible to process the requirements put on them. For example, the already increased 35 days to pay the IHT charge following a request from the beneficiary, should there be illiquid assets. In addition, the four weeks to provide a valuation. This is positive because, for many underlying assets, this just isn’t possible.
The full list of recommendations with regards to pensions and IHT are as follows:
The Government introduce a statutory safe harbour from late payment interest for PRs, where they can evidence that they took reasonable steps to try to meet those deadlines but that the reason for not meeting the deadline was outside their control.
The six-month IHT payment deadline be extended to 12 months for IHT on pension assets for a transitional period, so that PRs have a more realistic timeframe in which to meet their IHT liability while Pension Scheme Administrators (PSAs) update their processes.
The Government should implement a soft-landing period in which late payment interest and penalties will be suspended as the new rules bed in, for a minimum of two years.
HMRC monitor payment dates for IHT, comparing the position for those estates that include pension assets and those that do not, over any soft-landing period, to evaluate whether further easements are needed because of this measure. HMRC should publish details of its findings.
The Government works with pension sector representatives on how to adapt the existing Tell Us Once service so that it can be accessed by PSAs, so that PRs do not need to notify individual pension schemes separately after a member’s death.
The information sharing regulations include a verification process for confirming the identity of PRs, given the importance of the PSA sharing information before probate is granted.
HMRC work with pension sector representatives to provide pro forma letters and other documents that PRs can use to request information from PSAs.
HMRC work with PSAs to adopt uniform procedures, to ensure they respond quickly to information requests from PRs.
The Government revisit the four-week timeline for provision of valuation information by PSAs to PRs, particularly in relation to illiquid assets held within a scheme. A longer, more realistic timescale is needed.
For assets where it will be impracticable to obtain a valuation within the relevant period, the Government allow an approximate value to be initially provided with formal valuation, and any amendments to IHT accounts provided later.
The Government should not prioritise an April 2027 start date over getting the policy and the processes right. It is important that it takes the time now to find a workable process for managing the IHT process for pensions rather than rush to a solution that falls short of what is needed.
Stakeholders must be given an appropriate and reasonable period of time to review and comment on draft information-sharing regulations and related guidance. The Government should set out a timetable for next steps in finalising the processes, so that PSAs have a roadmap to guide their planning for getting ready for the change.
The Government should ensure that the Pensions Dashboard is live before April 2027, and that its functionality allows PRs to access it to find out about a deceased person’s pensions arrangements.
The Government should ensure that, as matter of priority, steps are taken to show all of an individual’s pension schemes in the Pensions Dashboard, including those in drawdown.
HMRC should clarify by Spring 2026 what steps a PR needs to have taken for HMRC to be satisfied that they have made “every effort” to identify pension funds.
The Government must work with relevant stakeholders to consider whether further changes are needed to its proposed PR-led process to ensure that PRs have realistic options available to them to manage liquidity challenges.
In addition to the changes announced at Budget 2025, the Government needs to be open to considering further changes to the PR-led process to help protect PRs from personal liability as a result of matters outside their control.
No later than April 2026, HMRC publish guidance on how the DPS (Direct Payment Scheme – akin to Scheme Pays for annual allowance charges) and retention mechanism are intended to work. This guidance should be in a form that can be used by PSAs in their communications with pension beneficiaries.
The Government work with PSAs on an ongoing basis to understand whether they are being required to sell assets at a loss in order to meet IHT deadlines, with a view to considering a possible loss-in-sale relief for both land and qualifying investments held in an individual’s pension scheme, as it is where such assets are held directly.
HMRC needs to continue to work with the relevant stakeholders, particularly legal and tax bodies, to understand and mitigate their concerns about the risks facing professional PRs.