Calls for state pension triple lock to be scrapped to pay for coronavirus

Experts call for the abolition of the pensions triple lock to cover the cost of tackling covid-19

Retired workers should no longer have their state pensions protected by the triple lock guarantee to help fund the coronavirus crisis, according to plans from the Social Market Foundation (SMF).

The Government bill to tackle the epidemic must be shared fairly between retirees and those of working age, new analysis from the think tank says.

Government debt will rise after the pandemic, which will force ministers to reform and reduce state spending.

In a new briefing paper, the SMF says any future austerity programme must not favour pension benefits over working-age welfare, as happened after the financial crisis.

What is the pensions triple lock?

The triple lock is a legal guarantee that the basic state pension will rise in line with the highest of average earnings growth, inflation or 2.5%.

It was introduced in 2011 to help ensure that typical pensioner household incomes rose regardless of their economic circumstances.

Should the triple lock be scrapped?

The effectiveness of the triple lock guarantee has been mooted since it was first announced. 

Some experts have criticised it for creating intergenerational inequality between working-age households, who have seen little wage growth over the last decade, and those who are retired.

Replacing the triple lock with a 'double lock' that removed the 2.5% element could save £20 billion over the next five years, the SMF estimates. These savings could help meet the escalating costs arising from the lockdown.

Scott Corfe, research director at the SMF, says: “Quite rightly, society is making sacrifices to protect its elderly right now. There is a clear case for intergenerational reciprocation when it comes to meeting the fiscal costs of the crisis in the years ahead.

“The crisis has emphasised our obligations to other generations, even in the face of personal sacrifice.  This spirit must be maintained when the dust settles, with the economic costs of responding to the crisis shared fairly across the generations.”

Keeping the triple lock in place may also pressure the government to increase the state pension age higher than its current forecasts.

Ian Browne, pensions expert at Quilter says:“If there is no departure from the triple lock it will only place increasing pressure on this government to address the state pension age.

“Increasing the state pension age to much later in life is the alternative means of reducing the future cost of retirement benefits, but would have greater harm on future generations.”

But charities warn that scrapping the triple lock could make hundreds of thousands of pensioners worse off.

Age UK estimates that 700,000 more pensioners could fall into poverty by 2050 if the government gets rid of the triple lock.