State pension triple lock ‘not sustainable’ as working Britons may lose out | Personal Finance | Finance

The state pension triple lock is often seen as a vital entitlement for older Britons. The policy has been in place since 2010, and ensures the sum rises each year by whichever is the highest of 2.5 percent, inflation or average earnings.

It was temporarily ditched this year, due to warped earnings data as a result of COVID-19.

However, from April onwards, the policy’s return will deliver a 10.1 percent boost in line with September’s CPI inflation figure.

This has piled pressure on concerns the triple lock is unaffordable, as the Government continues to grapple with tough economic decisions.

The Institute for Fiscal Studies (IFS) has warned the triple lock in its current form is “not sustainable”.

READ MORE: Inheritance tax warning as Britons fail to plan for 40% bill

“It is possible that the population currently of working age will not all end up benefitting in full from the same generosity.”

The think-tank highlighted growth in pensioner payments has significantly outstripped spending when it comes to working-age payments since the policy’s introduction in 2010.

Its analysis said real spending per working-age adult climbed from approximately £1,200 per year in the later 70s to £3,200 at the start of 2010, and then falling back to £2,500 shortly before the pandemic.

However, in comparison, spending on pensioners has climbed steadily, including during the 2010s.

READ MORE: UK gambling with £5.5trillion in inheritance as they don’t have a will

The older, basic state pension will rise at its full value from £141.85 to £156.20 per week.

Some may get less than the full new state pension if they were contracted out before April 6, 2016. 

The return of the triple lock has been welcomed by millions of pensioners.

Announcing the policy, Chancellor Jeremy Hunt said in November: “Because we have taken difficult decisions elsewhere in this statement, I can today announce that we will fulfil our pledge to the country to protect the pensions triple lock.

“In April, the state pension will increase in line with inflation, an £870 increase which represents the biggest ever cash increase in the state pension.

“To the millions of pensioners who will benefit from this measure I say – now and always, this Government is on your side.”

Check Also

American workers want record wages to change jobs, NY Fed finds

DISTILL CEO Neely Tamminga discusses whether the Fed has been restrictive enough to rein in …