Pension triple lock must be safeguarded – Ros Altmann

MPs will debate the State Pension uprating Bill next week when they consider the cross-party Lords amendments on protecting the triple lock earnings link.

The downgrading of the pensions triple lock continues to prompt much debate and discussion.
The downgrading of the pensions triple lock continues to prompt much debate and discussion.

Looking after pensioners is part of the social contract of our country. This is a point of principle – it is about what values our society considers important.

Sign up to our daily newsletter

It is also about trust and integrity, which is why we needed to make a stand about a policy decision that was made by MPs on the basis of misleading or flawed information.

The downgrading of the pensions triple lock continues to prompt much debate and discussion.

The Commons still have a chance to honour the triple lock manifesto commitment and preserve the important social security policy principle of protecting state pensions against rises in earnings.

The usual Average Weekly Earnings statistics produced by the ONS, which showed an increase of 8.3 per cent, were inflated by last year’s labour market interventions such as furlough.

And even if abandoning the earnings protection is supposed to be for just one year, the precedent it sets is that state pensions are a valid target to raid when Government wants to find money.

There is a myth that pensioners are all pretty well off, and therefore they should not be badly affected if their pensions are cut in real terms for a year.

Ros Altman is a Tory peer and former pensions minister.

In actual fact, there are over two million pensioners in poverty and inflation has been soaring, especially for the basic essentials that pensioners spend most money on.

Therefore, it seems hard to accept that our country cannot afford to protect the lowest state pension in the developed world, despite its promises just two years ago.

In 1979, the basic state pension was worth over 26 per cent of average earnings. In 2020, after many years of the triple lock, the basic state pension (£137.60 a week) was only 19 per cent of average earnings.

Even the full new state pension (£179.60 a week) is less, relative to earnings, than just the basic state pension was in 1979.

The poorest pensioners, who usually have no earnings related pensions to supplement the basic State Pension, can claim the means-tested Pension Credit. This was introduced from 2002 to try to alleviate rising pensioner poverty. But this Pension Credit Minimum Income Guarantee (£177.10 a week) also leaves millions of pensioners with inadequate incomes.

Official statistics show that pensioner poverty remains a significant social issue and has been increasing in recent years.

The charity Independent Age points out that more than half of single pensioners live in fuel poverty, while 13 per cent of older households are in extreme fuel poverty. Those numbers will undoubtedly grow if the Government insists on removing the triple lock and giving just a 3.1 per cent rise.

Astonishingly, the Commons voted to scrap important triple lock earnings link with little scrutiny. Even though this affects millions of people and earnings uprating is the most important element of pensioner protection, this legislation passed through all the stages in the Commons in just a couple of hours, with very few MPs present.

Not only were MPs incorrectly led to believe there was no way to avoid taking away the triple lock, otherwise state pensions would have to rise by 8.3 per cent (costing over £5bn), they were also assured using the Consumer Price Index would still protect pensioners against rising living costs. Both these assurances were false.

It rather strains credulity that the entire army of statisticians and actuaries in the Department for Work and Pensions, Treasury and all across Government cannot produce a reasonable adjusted earnings figure to uprate state pensions next year. But if they really are struggling, then official statistics are available to them.

I am afraid this may be more about cutting pensions and using the money for other purposes, than concern for protecting pensioners as promised.

Abandoning the triple lock for pensioners is the biggest spending reduction/cost-cutting measure in the Budget. This move saves the Treasury £5.4bn in 2022-23, £5.8bn in 2023-24 and £6.1bn in 2023-34. Only the new National Insurance levy raised more money than this. Pensioners are expected to accept a cut in their income and living standards just as inflation is taking off.

It’s not too late. The Government has considered 
this to be a fait accompli, and perhaps the whips will win the day, but if we don’t try there is no hope at all. Pensioners deserve better.

Ros Altmann is a Tory peer and former Pensions Minister.

Support The Yorkshire Post and become a subscriber today. Your subscription will help us to continue to bring quality news to the people of Yorkshire. In return, you’ll see fewer ads on site, get free access to our app, receive exclusive members-only offers and access to all premium content and columns. Click here to subscribe.