State Pension  

Conservatives to end state pension triple lock

Conservatives to end state pension triple lock

The Conservatives will abandon the state pension triple lock after 2020 and replace it with a new double lock, the party's general election manifesto revealed today (18 May).

The double lock will mean that pensions will increase in in line with earnings or in line with inflation, whichever is greater.

Unlike Labour, which is freezing the state pension age rises at 66, the Conservatives revealed they will will increase the state pension age in line with life expectancy if they are re-elected to government on 8 June.

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Hugh Nolan, president of the Society of Pension Professionals and director at Spence & Partners, said:  “The triple lock is unsustainable with our ageing population and so it is good to see the Conservative Party being honest about this uncomfortable truth.

"Pensions look like a typical battleground for this election with Labour promising benefits that might be unaffordable, the Lib Dems flying the flag for equality, and the Tories being ruthlessly realistic."

David Robbins, senior consultant at Willis Towers Watson, said the Office for Budget Responsibility assumes that, over the long term, the triple lock has the same effect as increasing the state pension by earning plus 0.34 per cent every year.

Using its methodology, the double lock works out at earnings plus 0.26 per cent.  

So Mr Robbins said the value of affected state pensions would still be ratcheted up relative to average earnings, just by a bit less.

He said: "The 2.5 per cent part of the triple lock doesn't make any sense as a policy, but it served a political purpose: it was there to avoid a repeat of the 75p per week increase in the basic state pension that Gordon Brown awarded in 2000, when inflation was low.  

"Seventeen years on, (Conservative leader and prime minister) Theresa May used that 75p increase as a stick to beat Labour with in the final prime minister's questions before the election.  

"So it is hard to see her sticking rigidly to the double lock if inflation and earnings growth were both very low."

Tom Selby, senior analyst at AJ Bell, said the triple lock was an expensive policy and Mrs May has clearly sounded its death knell.  

He pointed out Office for Budget Responsibility projections suggest retaining the triple-lock could cost £15bn more than earnings indexation by 2060.

Mr Selby said: “A double lock of inflation or earnings after 2020 will still ensure the state pension at least increases in line with the cost of living."

The manifesto also stated the Conservatives will "ensure that the state pension age reflects increases in life expectancy".

Willis Towers Watson's Mr Robbins pointed out "that could mean anything - it is how those increases are reflected that matters. The fastest timetable that the Conservatives were considering before the election would see the state pension age rise to 68 in 2030 - just in time to catch the population bulge from the 1960s baby boom."