State pension triple lock: is a stay of execution on the cards?

Kyle Caldwell
12 June 2017
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Proposed changes to the state pension triple lock have been thrown into limbo, following last week's election result.  

It was expected that the triple lock would be reformed into a 'double lock' under a Conservative premiership.

But, having failed to secure an outright majority, the triple lock and other proposed changes to pension taxation have been thrown into limbo. 

Prior to the election, various changes related to pensions were left out of the Finance Bill and temporarily put on ice. Changes on the table, such as the reduction to the amount savers can pay into a pension once they have started taking a pension income (known as the money purchase annual allowance or MPAA), were given a temporary stay of execution, as the policies did not have enough time to be rubber-stamped ahead of parliament being dissolved.

At this stage it is unclear whether those policies will remain or be watered down, but one thing is for sure: it will now be more difficult for the Conservative Party to push reforms through, as it does not have a majority.

One policy which looks ripe for a permanent stay of execution is the state pension triple lock, due to the stance of the Democratic Unionist Party (DUP) – the party the Conservative Party is hoping for to strike a deal with to secure a working majority.

The DUP pledged in its manifesto to retain the triple lock, and will not want to back down and break its word, so is therefore unlikely to agree to vote the changes through.

Steve Webb, the former pensions minister, who now works for Royal London, thinks the triple lock changes may well indeed be "kicked into the long grass".

He says: "The lack of an outright Conservative majority means radical reform in any area will be hard to get through parliament, but we may see sensible incremental changes as a result of the review of automatic enrolment.  

"As a former chief secretary to the Treasury, David Gauke (the new secretary of state for work and pensions) will be used to focusing on keeping spending under control, but political pressures may mean savings on the triple lock and on winter fuel payments have to be kicked into the long grass."

What is the triple lock?

Under the triple lock, first introduced in 2010 by the Conservative/Liberal Democrat coalition government, the state pension increases each year by the highest of three measures: inflation, the average earnings increase, or 2.5%.

As part of its 2015 election manifesto, the Conservative Party pledged to maintain the triple lock until 2020.

This time around the Conservatives retained this commitment, but pledged to tweak the rules after 2020, introducing a new ‘double lock’. Under the double lock, pensions would rise in line with earnings or inflation, whichever is highest.

Other parties have pledged to keep the triple lock, including Labour and the Liberal Democrats.

Comments

In reply to by anonymous_stub (not verified)

So why isn't it?

In reply to by anonymous_stub (not verified)

The link between average earnings should never have been broken by the Thatcher government. If it had remained the state pension would now be about £50 per week higher.

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