Prime Minister Keir Starmer at conference.
Credit: Shutterstock.
The UK’s Triple Lock system for protecting pensioners against the cost of inflation is at threat of being axed by the government, it has been revealed, in the same week that it was announced that the fixed Winter Fuel Payment was to be scrapped.
The Triple Lock is a system that ensures the state pension increases each year with inflation. Pensions rise in line with wage growth, CPI inflation, or a straight 2.5 percent, or whichever is the highest amount of the three.
While Labour pledged in their election manifesto to leave the Triple Lock system as it is, murmurs from Westminster say its days are numbered as the government attempts to tackle what they claim is a €22 billion ‘black hole’ in the economy.
Pensioners left with multiple overly bureaucratic application forms
The change of the Winter Fuel Payment over to a complex means-tested payment system leaves pensioners with multiple overly bureaucratic application forms to get their heads around and apply for. News of the scrapping the Winter Fuel Payments met with public outrage when it was announced, not least by pensioners who had banked on Labour looking out for their interests.
By changing the Winter Fuel Payment to become means tested, it means, according to economists, that the Triple Lock may eventually have to be altered in some way in the future as well.
Is the government predicting runaway inflation?
Due to its ‘ratcheting effect’, the Office for Budget Responsibility has called the Triple Lock a ‘financial risk’, leaving public coffers vulnerable to higher overall pension costs. If the government is predicting runaway inflation, they may be right, begging the question of what they are doing to protect the UK from such economic effects.
The uncertainty The Institute for Fiscal Studies says it has over the Triple Lock comes from their wildly vague budgetary predictions for spending on pensions for 2050, which range from somewhere between £5 billion and £45 billion.
Experts believe Single Lock pensions would be sustainable
Analysts at the Financial Times reckon it would be smarter and more sustainable to have some sort of ‘Single Lock’ system based on wage growth. Similarly, the OECD is of the opinion that pensions should be increased with earnings growth, plus CPI inflation, plus means-tested extras for the poorest pensioners.
Meanwhile, anger over the changes to the Winter Fuel Payment has spread like a pandemic to the first Labour Party conference since Keir Starmer took office. Reports from Labour Party members say the conference is completely divided over the issue.
