Prime Minister David Cameron has pledged that the state the pension will continue to rise by at least 2.5 per cent per year until 2020 if the Conservatives win the next election, as he finally confirmed rumours that the controversial ‘triple lock’ will remain in place.
The lock provides for the state pension to increase in line with the higher of earnings, inflation or 2.5 per cent. It is written into coalition agreement but is not present in the new Pensions Bill, which states the new flat-rate pension will be increased in line with average earnings.
In an interview on yesterday’s (5 January) Andrew Marr show, Mr Cameron said it was “fair” to prioritise pensions, to ensure that retirees can have “dignity and security in their old age”.
He said: “People who have worked hard, who have done the right thing, who have provided for their families, they should then know they will get a decent state pension and they don’t have to worry about it lagging behind prices or earnings and I think that’s the right choice for the country.”
The government could face criticism for some quarters over the pledge, given that pensions currently represent more than half of the welfare budget and are being increased at least in line with inflation at a time when other benefits are being cut.
Pensioners have seen their incomes rise above those of earners over recent years as a result of the triple lock.
Figures from the Department for Works and Pensions highlighted that the promise could cost the government an additional £45bn over the next 15 years.
Last year, data from the Office for National Statistics projected that the number of people of state pension age will increase by 31 per cent from 12.3m in 2012 to 16.1m by mid-2037 despite planned increases to the age people can begin claiming benefits.
Following reforms announced in 2011 by the government, the state pension age is set to increase to 66 between 2018 and 2020 and to 67 between 2026 and 2028.
