“But even more contentious is the fact that once the furlough scheme ends later this year and if wages recover, in its current form the triple lock will provide an artificially large boost to state pension income in 2022-23 when we could be in the clasp of a deep recession and when the government is struggling to control the deficit.”
Some have suggested that the government could add a smoothing mechanism to the triple lock to track inflation and earnings growth over a two-year period, which could help the government save £15bn in 2022-23.
Earlier this month (September 8), the Pensions Policy Institute said moving to a double lock, which has been touted by many across the industry, would not save money in the short term and said a smoothing mechanism would be a better proposal.
Meanwhile, Aegon had raised a smoothing mechanism as an option last month (August 24), saying the triple lock should be considered over two years rather than one, with state pensioners granted whatever the formula produces next April and the increase in 2022 based on a two-year period.
This would then average out any rise in earnings growth.
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