The triple-lock ensures pension incomes go up with inflation, earnings or 2.5%, whichever is higher. It means that state pension incomes are hard-wired to grow ahead of pay.
“In their manifesto, the Conservatives pledged to move to a double-lock, which would see pensions rise by earnings or inflation. They were the only party to commit to ending the triple-lock and the policy was designed to dampen the ratchet-effect of underpinning pension increases by 2.5%.
“But with inflation pushing beyond that level, there is no saving to be made by moving to a double-lock. With inflation running at greater than 2.5%, both the double and triple-lock would cost the same*.
“Over the longer term, retaining a triple-lock on state pensions will still mean future spending on retirement benefits will rise significantly. But in the immediate term, it means the Conservatives could concede ground on their double-lock policy with relative ease, making it an obvious concession in their current negotiations with the DUP.
“Over the long term, both the triple and the double-lock will see state pension spending increase. Even a double-lock would result in a £30bn increase over the next half-century, according to the Institute for Fiscal Studies.
“If there is no departure from the triple-lock it will ultimately place more pressure on future governments to address the state pension age. Preventing people from accessing a state pension until later in life is the alternative means of reducing the future cost of retirement benefits.”
*The 17/18 financial year uses September 2016’s figures to measure inflation (consumer prices index) and wages, meaning pension increases for this year are already set. Figures in September 2017 will subsequently inform state pension increases in 18/19. If inflation or average earnings are above 2.5%, state pension payments will increase by the higher of those two figures, regardless of whether or not a triple-lock, or double-lock policy is in place.
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