Females face spending power erosion if triple lock goes

Fiona Tait, technical director for Intelligent Pensions, is concerned any abandonment of the earnings link as part of the triple lock promise would disproportionately affect women.

She explained: "The bottom line is that proportionately more women are wholly reliant on the state pension than men and are likely to suffer more if the triple lock is dropped or watered down.

"Without the triple lock they will still receive a guaranteed pension, but their purchasing power may erode over time."

Tait said this would be of "even greater relevance to women", as due to interrupted working patterns and lower earnings, they are more likely to rely upon it as their main or possibly only source of income.

She highlighted data from the Pensions Policy Institute (pictured above), which showed 50 per cent more women than men are likely to have no other pension income in retirement.

Millions of pensioners, mostly women, have no private pension at all.Altmann

In August, the Office for National Statistics issued a headline 8.8 per cent earnings figure, followed by a revised, lower figure, which sent economists at the Exchequer into action, concerned about the way in which the current triple lock mechanism for uprating the state pension might mean billions of additional pounds are needed to meet the promises. 

As a result, chancellor Rishi Sunak said the government would look to revise the way in which the earnings element of the triple lock works.

But as Tait commented, it is "not entirely true" that younger workers - female or otherwise - would not benefit from the higher indexation afforded by the triple lock.

She said: "As each increase is applied on top of the one before everyone who qualifies for the state pension in future will, in theory at least, receive a higher State Pension when they themselves comes to retire."

Tait said there were always concerns about the sustainability of the triple lock prior to the pandemic, but the impact of a year of furloughs and job losses, followed by a year of re-employment and growth, meant the problem has now "become acute". 

What the ONS figures said

ONS figures in August showed that earnings rose 8.8 per cent, which is more than twice the value seen in any previous year since the triple lock was brought in, and well out of line with the other two measures: prices and the 2.5 per cent floor. 

The ONS suggested adjusting for the pandemic would result in a more realistic ‘underlying’ figure of between 3.5 – 4.9 per cent, which Tait said meant the state pension would still increase.

However, Tait also warned it was important for women to start saving early and not rely on state pension entitlement.

She added: "Women are more likely to take a career break, and those who return to work often do so in lower paid jobs.

"Savings may well be more affordable prior to starting a family and those which are put aside early on will also benefit most from investment growth over time."

Her comments were echoed by those of independent pensions consultant Baroness Ros Altmann, former pensions minister. 

Altmann said: "The UK’s deliberately low state pension policy relies on private pensions to top it up. But millions of pensioners, mostly women, have no private pension at all.

"Many never had the chance for an occupational pension and seem to have been ignored or overlooked in policy deliberations. This leaves them vulnerable to poverty. Denying them the earnings link will make them worse off relative to the rest of society."

But there was an element of "good news", according to Tait. She said: "Since the introduction of the new state pension, women are more likely to qualify for a full state pension in their own right, which will be payable however long they live."

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