State Pension  

Cridland's call to scrap triple lock gets industry support

Cridland's call to scrap triple lock gets industry support

Pension experts and providers are broadly united in their support of John Cridland's recommendation that the government scrap the triple lock on state pension guarantees.

Mr Cridland released his final recommendations today (23 March) following a year-long review of the state pension age.

His key recommendations were that the government should accelerate its timetable for raising the state pension age and replace the triple lock with a link to earnings.

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The triple lock guarantees that the state pension will increase in line with the highest of inflation, earnings and 2.5 per cent.

The government has promised to keep the triple lock in place until 2020, but has not revealed its intentions beyond that.

Mr Cridland proposed abolishing the link to inflation and the 2.5 per cent guarantee.

Commenting on the recommendation, Professor David Blake, director of the Pensions Institute, said: "Given that pensioners have done relatively well compared with workers over the last few years (getting a minimum pension increase of 2.5 per cent whatever is happening to prices and wages), this change is unavoidable, and many of us have been calling for it for a number of years."

Richard Parkin, head of pensions policy at Fidelity International, said Mr Cridland’s recommendations had "hit the right note".

"While the triple lock was a useful policy for lifting pensioner incomes from a very low base, it seems fiscally unsustainable and the step change in incomes delivered by the new state pension has made its purpose less clear."

He said the proposed link to earnings meant pensions would stay pegged to the national standard of living.

However, he added this would leave those on fixed incomes "exposed to price rises".

Jon Greer, pensions expert at Old Mutual Wealth, was more sceptical.

He described the triple lock as "good policy", and urged the government to consider a replacement policy so that "when earnings fall behind price inflation, an above earnings increase could kick in until real earnings growth resumes".

Lesley Harrold, senior knowledge lawyer in the pensions team at Norton Rose Fulbright, supported former pensions minister Baroness Ros Altmann's suggestion the government adopt a “double lock”, "under which pensions keep pace with wage increases and inflation but are not also protected by a minimum 2.5 per cent uplift, which is very costly in times of low inflation, as now."

Baroness Altmann herself said there was "no economic or social rationale" for the triple lock, adding the 2.5 per cent increase was "not related to any economic variables and is politically motivated."

"The longer the triple lock stays in place, the more disadvantaged those who are not covered will become and the greater the pressure to increase state pension age even further," she said.

Speaking more generally about Mr Cridland's recommendations, Aberdeen Asset Management's head of retirement savings Gregg McClymont said hiking the state pension age raised "huge issues of fairness".