The Government should ditch the pension triple lock and come up with a new method of setting increases to the state pension to make it affordable in the long-term, a think-tank has said.
Under the current triple lock policy, the state pension will increase by whatever is highest: inflation, earnings growth or 2.5 per cent each year, but there are concerns that this guarantee will have to be ditched because of the rising cost.
the i's Money and Business report Callum Mason explains why everyone should care about the triple lock state pension
Filmed by Robbie Hawken.
Music is from Sonic Music licensed via Pixabay.
Check out their music here: https://pixabay.com/users/sonicmusic-37772443/
Under the current triple lock policy, the state pension will increase by whatever is highest: inflation, earnings growth or 2.5 per cent each year, but there are concerns that this guarantee will have to be ditched because of the rising cost.
the i's Money and Business report Callum Mason explains why everyone should care about the triple lock state pension
Filmed by Robbie Hawken.
Music is from Sonic Music licensed via Pixabay.
Check out their music here: https://pixabay.com/users/sonicmusic-37772443/
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NewsTranscript
00:00 There are growing questions over whether the government will continue with the state pension
00:03 triple lock. Here's what it is and why you should care.
00:06 The state pension triple lock ensures that pensioners get an increase each year to their
00:16 state pension and that it goes up by the highest of inflation average earnings or 2.5%. The
00:22 idea behind it is that the state pension used to be quite a low figure and the government
00:27 wants the state pension to increase so that it's more of a portion of average earnings.
00:32 The reason this matters to you is because it not only determines what you get as a pensioner
00:36 but it also determines what the pensioners of the future will get as well. The state
00:40 pension used to be quite low and in 2010 the government introduced the triple lock with
00:44 the aim of ratcheting it up so that it was more of a proportion of average earnings.
00:49 In recent years this has become more difficult because we've had in some ways quite unexpected
00:54 economic data. So last year we had a rise to the state pension of over 10% and we're
00:59 going to get a rise of 8.5% next year as well. There are questions over whether the state
01:04 pension can keep being affordable if it keeps going up by large amounts each year.
01:08 The triple lock has helped lift 250,000 older people out of poverty.
01:14 And a new report from the Institute of Fiscal Studies today has said that they want to replace
01:18 the triple lock. Instead they want the government to move towards a fixed target for what the
01:23 state pension should be. Once it reaches this level they then suggest that it could increase
01:28 with average earnings instead so that it isn't tied to the highest of those three values
01:33 which means that it often increases by higher than inflation or average earnings.
01:37 Since 1975 the state pension has increased every year at least in line with inflation.
01:43 But a third of people think that in the next 10 years it will stop doing so. And this pessimism
01:48 is actually so widespread that some people think that the state pension won't exist at
01:52 all in another 30 years according to polling. This change from the IFS is targeted to try
01:58 and make sure that that pessimism goes by making the state pension more sustainable.
02:02 Showing a conservative government will always back our pensioners.
02:07 One alternative to decrease the spending on the state pension is to increase the state
02:11 pension age so that people get the same amount of money but get it later in their lives.
02:15 The IFS has recommended against raising the state pension age because what this would
02:19 mean is that people who live longer, who are generally wealthier, would benefit.
02:23 Because we want to support people to live in dignity in retirement with a decent pension
02:27 and good health care.
02:28 After the next general election the future of the triple lock looks a little uncertain.
02:32 Neither party is committed to continuing it and will have to wait for the coming months
02:36 and years to find out if it will be continuing beyond 2024.
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