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Average total pay (including bonuses) shot up 8.8 percent in the three months to June as lockdown restrictions eased; pensioners could receive just over £10,000 a year if the state pension rises by the same amount.
But critics say the triple lock is a “farcical” policy which will end up costing taxpayers billions but there are fears that female pensioners in particular will see their incomes eroded if it is weakened or ditched.
Even with the triple lock, according to Age UK, there are 1.2million female pensioners in poverty.
In the last financial year, single women pensioners had an average income of just £221 a week – of which nearly two thirds was benefit income. Research by Independent Age found poverty levels for this group rose from 17 percent in 2011 to 27 percent in 2020.
The triple lock – under which the state pension rises by whichever is highest, 2.5 percent, inflation or average earnings – was a flagship policy of the Conservative-Liberal Democrat coalition.
Former Lib Dem pensions minister Steve Webb, a partner with pensions specialist LCP, said: “For me, the key question is: Does the Treasury use this as [a] Trojan Horse to scrap the triple lock permanently? And that’s where I would draw the line.”
He warned that the UK has “one of the lowest pensions in the developed world” and that ditching the triple lock will “mean more women retiring poor”.
Figures for April show the new state pension of £179.60 a week is far behind that of the Republic of Ireland (£212.08) and the Netherlands (£254.07).
Former Conservative pensions minister Baroness Altmann has warned that breaking the earnings link would set a “dangerous precedent”.
Boris Johnson went into the 2019 election with a manifesto pledge to “keep the triple lock” and any changes – especially those which resulted in a below inflation increase to pensions – would spark a political backlash.
Chris Elmore, Labour MP for Ogmore and vice-chair of the all-party group on pensions, said: “Any move to drop the pension triple lock will be seen for what it is: breaking a manifesto promise to the electorate and undermining pensioner income. This comes on top of the abolition of free TV licences.”
Caroline Abrahams of Age UK warned: “[The] reality is that pensioner poverty is on the rise and currently tops two million, so there’s a copper-bottomed argument for keeping the triple lock to protect and hopefully increase the retirement incomes of tomorrow’s older people, as well as today’s.”
The Women Against State Pension Inequality (Waspi) campaign said that any change to link with earnings would represent a “raid on our state pensions”.
A spokeswoman warned that women born in the 1950s are “more likely to be entirely reliant on the state pension” with a “pension pot 50 percent smaller than a man’s due to irregular work patterns because of child care and caring for elderly parents and relatives”.
Jan Shortt, general secretary of the National Pensioners’ Convention, cautioned: “Even an eight percent rise in the state pension in April 2022 will not recoup the losses to pensioners as a result of the Conservative government cutting the link to earnings in the 1980s… Every time pensions are messed with, women are the losers.”
However, Alexander Hammond of the Institute of Economic Affairs, said: “The triple lock is an expensive and farcical policy that has no place in our current economic climate… The alleged 8.8 percent increase in earnings compares earnings today to their levels this time last year – when roughly nine million workers were on furlough…
“The real wage growth in the last year is closer to half the 8.8% figure. As the Treasury has to fork out an extra £900million for every percentage point increase in the triple lock, this disparity will unnecessarily cost the taxpayer billions.”
A Treasury spokesman said: “We will continue to support retired people while ensuring future decisions are fair for both pensioners and taxpayers. The Government will confirm next year’s state pension rates in the autumn”.
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