State Pension  

Two in five advisers agree with triple lock earnings scrap

Two in five advisers agree with triple lock earnings scrap

Two in five advisers agree that the earnings element of the triple lock should be suspended, whereas a quarter say it should be kept as it is, FTAdviser has found.

A poll by FTAdviser, carried out this week (September 7) before the government made its announcement, found out of 60 respondents 23 (38 per cent) said the earnings element should be put on hold this year, but only two people (3 per cent) said it should be scrapped permanently.

It comes as the government said for 2022/23 the new and basic state pension will increase by 2.5 per cent or in line with inflation, which is expected to be the higher figure this year.

The government said the decision was made to stop pensioners "unfairly benefiting from a statistical anomaly" - in relation to artificially inflated earnings data following the government's coronavirus furlough policy - and the policy would be reinstated in the following year.

But 17 respondents (28 per cent) believed the triple lock should be kept as it is and 14 (23 per cent) favoured increasing the state pension by inflation only.

In addition, four people (7 per cent) said the triple lock should be scrapped entirely.

The government's move is likely to disappoint pensioners who were potentially in line to receive an 8 per cent boost to their state pension, but advisers say it was needed in order to maintain fairness between the generations.

Martin Bamford, head of client education at Informed Choice, said the triple lock has always been generous and a fairer method would be to take an average of the three measures.

Bamford said: “Moving from triple to double lock, as opportunistic as it seems in light of rising average earnings, is a sensible approach.

"Referencing state pension income to earnings always struck me as odd, as pensioners should be concerned with the price of goods and services, not what working age people are earning.

“While there will be a short-term hit for existing state pensioners next year, by virtue of lower escalation, we all ultimately end up with a smaller state pension in the future, even if the government miraculously restores the triple lock in 2023.”

Dominic James Murray, chief executive of Cameron James, said he appreciated why the government had to make its choice.

“The CV19 pandemic will create an anomaly and an unusual rise in earnings data which would push this figure higher,” Murray said. 

“Particularly in a time when the government has already had to dig deep to fund the huge vaccine roll-out most citizens have benefited from.”

amy.austin@ft.com

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