Andy Burnham announces changes to Triple Lock

Commenting on the Prime Minister’s Labour Conference speech, Calum Cooper, Head of Pensions Policy Innovation, Hymans Robertson, says

“It’s clear that the debate around triple lock lasting indefinitely has, for now, been clarified by this government. Today’s speech from Andy Burnham clearly reiterated this governments commitment to change the current pension system with a commitment for triple lock to be in place until 2030.  But, it’s now clear that the thinking about the state pension will move forward over the next few years. The most important question is not, however, what happens in this parliament, but what the long-term destination should be. Looking ahead, it sounds like the future vision will move to a more stable and sustainable ‘double lock’ mechanism, but we await more details on how this will work in reality. The change mentioned today is close to the approach suggested by the IFS, with a projected saving for the government in the billions.

“While at first glance this seems to be clear fiscal decision, to support the social care plans, the perception and reality of this are misleading. Currently state pension provides around 90% of the Pensions UK minimum retirement standards needed for the bare minimum of what is deemed a good retirement, with financial independence and dignity at its core. And this is expected to rise to near 100% within a decade. The perception of wealthy pensioners misses the vast swathes of pensioner poverty existing in the UK, and the government’s commitment to protect low-income pensioners was highlighted by the Prime Minister today. Pensions are built on the foundations of a social contract where each generation should expect to be no worse off than previous generations.

“Today’s speech, and subsequent timeline on future government thinking, is a chance to make changes in sustained planned manner providing hope for a future generation. It’s also certainty for the current generation of pensioners, and those who are within touching line of this. The Prime Minister has opened the right debate. The triple lock cannot sensibly continue for ever, but reform should not be a simple cost-cutting exercise. We need a clear adequacy target, protection against inflation and a credible long-term link to earnings.”

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