The "triple lock" guarantee on annual increases to the state pension is "unfair and unsustainable" and should be scrapped, the Work and Pensions select committee has said.
In a report released on Sunday (6 November), the committee argued the guarantee - which links annual pension increases to the highest of inflation, earnings or 2.5 per cent - was skewed towards the baby-boomer generation at the expense of millennials.
The committee called for the guarantee to be scrapped by 2020 and replaced by a more affordable "smoothed earnings link".
It came after similar calls from former Work and Pensions Secretary Iain Duncan Smith and former pensions minister Ros Altmann.
Explaining the committee's decision, chairman Frank Field MP said a combination of factors had sent the balance of the welfare state "out of kilter".
"It is now the working young and their children who face the daunting challenge of getting on in an economy skewed against them.
"Home ownership, taken as a given by many in my generation, is out of reach for too many aspiring young people today.
"At the same time as tightening their belts, they are being asked to support a group that has fared relatively well in recent years."
He said millennials faced being the first generation to be "poorer than their forebears", and urged politicians to accept these trends and "act now" to address them.
The 55-page report stated the third and most controversial component of the triple lock - the guaranteed 2.5 per cent increase - had "no objective justification".
However, it did not call for a simple "double lock" linking annual increases to the highest of inflation or average earnings - the alternative recommended by many critics of the triple lock.
Instead, it called for a more complicated, but "fiscally sustainable" method for calculating annual rises.
According to the committee's proposal, annual increases in the state pension could not fall below a "benchmark proportion of average earnings".
If inflation exceeded that figure, state pension increases would follow it.
However, if annual earnings exceeded both the earnings benchmark and inflation, the state pension would not follow, tracking instead the highest of the earnings benchmark or inflation.
The report did not explain how the "benchmark proportion of average earnings" would be calculated.
David Sinclair, director of the International Longevity Centre UK, said it was right to debate the question of pensioner benefits, but objected to the committee's position on inter-generational fairness.
Mr Sinclair said: "This debate cannot be about young versus old. Younger people are tomorrow's pensioners. They can look forward to a long and increasingly healthy old age.
"Younger people will need the support of a welfare state and many will rely on it. Younger people need decent, well-paid jobs which help them save for old age."
Tom McPhail, head of pension policy at Hargreaves Lansdown, said the comparatively high turnout of older voters in general elections meant politicians were " chronically compromised" when it came implementing policies deemed to be unpopular with this demographic.
However, he warned that reducing state pension benefit increases could have damaging consequences.
"We are about to hit ‘peak DB’ after which successive pensioners will be increasingly reliant on the state pension and on defined contribution arrangements.
"Any measure to curb either of these in the next few years could rapidly push more pensioners back into poverty,” he said.
AJ Bell senior analyst Tom Selby said the triple lock was an expensive measure that was never meant to be permanent.
He said: "The government will be wary about hitting pensioners ahead of the 2020 election - and breaking its manifesto promise in the process - but beyond that the triple-lock's future looks bleak," he said.
james.fernyhough@ft.com
