The Pensions Triple Lock has to go

[Flammkuchen]

When it was introduced, the aim of the Triple Lock was to increase pensions faster than earnings as the state pension was low. The TL has been very successful: pensioners now have a higher standard of living and more disposable income than working families. A pensioner couple each getting the full state pension receive £20k per year, with any private pension income on top.

This is great for them, but it comes with a trade-off. In order to increase pensions by over 10% a year, there is less money to pay nurses, teachers or doctors. Highly skilled public sector workers have low pay and there is a recruitment crisis.

AIBU to think that now that on average pensioners have higher disposable income than those in work, a policy that aims to increase pensioner income by MORE than average earnings - and so keep increasing the income of pensioner households faster than working households - needs to be rethought? Even just linking the state pension to average earnings would be better.

Agreed.

pensioners now have a higher standard of living and more disposable income than working families

I can’t find anything at all to support your statement. Can you link to any evidence please @Flammkuchen

Many are literally rolling in money and assets and yet get lots of free cash thrown at them

You don't seem to know how pensions work. If they are getting that 'free cash' then they paid enough NI over a working life to be entitled to a state pension.

The pensions triple lock is the Conservative Party’s contract with its own voters. It is the main method by which the party rewards its main power base, the over 60s, for voting for it. Not even the Tories are stupid or incompetent enough to commit political suicide by messing with it, so it will remain sacrosanct for as long as they are in government.

And for the last time, I support the state pension (and will get one myself soon and am positively pleased that it is now noticeably better). But as an economist, the idea that government spending in any area continually increases faster than earnings for ever is clearly bonkers.

Jeeze, the ignorance of this comment.
How exactly do you know that all these pensioners are Tory voters?

pensioners now have a higher standard of living and more disposable income than working families

Show your workings.

Can someone please explain why pensions should increase faster than average earnings each year, and why that is fair?

Shhhh, they don’t want to hear about your type of pensioner. It doesn’t fit their agenda!

Because the alternative is housing the older population, feeding them, clothing them. Essentially those who rely only upon their state pension would require the reinvention of workhouses.

Set aside your thought of equality, forgetting equity, and remember that older people are not the enemy. They are your future self. Your race for the bottom would serve you very ill by the time you require help once you can no longer earn a living.

I'll give it go, Pensioners who pay higher rate tax.

My sister and partner do, public sector jobs, FS pensions and 3 rental properties...very pleased with their 10% increase... they aren't unique either, top of my head i could name 4 or 5 pensioners who are very wealthy.

Means testing 40% tax payers wouldn't be hard... HMRC have the numbers, these folk don't get a 10% rise or other pensioner benefits.

I'm not against an inflation linked rise non tax paying pensioners but i do not understand the argument that nurses etc cannot have such a pay rise but ALL pensioners can....

No one on this thread has successfully answered OP's question.

Sorry but not all pensioners are Tories but enough of them are that they are as a group KEY to the tories staying in power.

Also, state pension is given even to people who have barely worked or been in benefits all their life,

This country is bizarre in that people who put nothing in still expect to have a very comfortable retirement.

Retirement age will be 75 by the time many of us get there, and lots of these benefits no doubt will be taken away as the voting demographic and dynamics change

The Triple-Lock was introduced because Thatcher had cut the link between pensions and earnings which meant the pension became very low. The Triple-Lock has been hugely effective in boosting pension income. It is now time to restore the link with average earnings.
No it wasn't - it was actually introduced as a Tory electoral gimmick because the previous Labour policy already restored the link between prices and pension, but there was derision in 1999 when it resulted in a 75p increase to the State Pension as the rate of inflation was low. The Tories capitalised on this in 2010 by introducing the triple lock.
The triple lock does have a link to average earnings.

Why is it up to us to explain it? ask the government why they think its fair. Perhaps they think it is because the pensions are startting from a lower base than incomes anyway and afer never going to catch up with them. Perhaps they think that the alternative is even more pensioners in poverty.

You're an economist and you can't work things like this out for yourself?

Sorry but not all pensioners are Tories but enough of them are that they are as a group KEY to the tories staying in power

Gracious me, a govt rewarding the demographic that reliably votes for them. Other parties would never do that, I'm sure.

Also, state pension is given even to people who have barely worked or been in benefits all their life,
How would you suggest such people are dealt with? Back to the Workhouse? Send them to Rwanda?

The vast majority of pensioners are, and will be till they die, on the old pension which is considerably less than £10k a year. It is only those who have reached retirement age in the last 4 years who are on the new rate.

It’s not about fairness, it’s about politics, and to think otherwise is naive.

I get my state pension and a tiny nhs pension. Dh is still working. We have a bit left to pay on the mortgage and we pay tax on our income, just as we have always done. Pensioners pay income tax at the same rate as everyone else.

Come on, the state pension is basic. Maybe 30 years ago, people assumed that this was a living amount.

These days, everyone has had more than enough time to provide for a pension of their own. The Government could not have made it any clearer than you should obtain a private pension.

Inflation linking is still sensible. But if you are planning to rely on the state pension in old age for a decent standard of living that is mad. Anyone with anything about them will now have planned for some other support.

Means testing 40% tax payers wouldn't be hard... HMRC have the numbers, these folk don't get a 10% rise or other pensioner benefits

You've just killed aspiration stone dead. Why work and better yourself if once it comes to getting your pension you are penalised?

So your mother won’t be in receipt of a State pension. Your father’s private pension is in effect a savings scheme that he paid into.
Also, what’s you being single and childless got to do with anything? I know plenty of women like you who have their own private pension and own a house. It’s not hard.

Can someone please explain why pensions should increase faster than average earnings each year, and why that is fair?
The question is based on a falsehood - that isn't how it works, but yes it's fair to try to allow older people who can no longer work to live out what remains of their lives in dignity - what kind of society wouldn't want that? The wealthier ones continue to pay income taxes and all of us pay consumption taxes, and are keeping businesses afloat and people in jobs.

My other Grandmother, who never worked a day in her life, lives in a fully funded one bedroom apartment (in a complex for pensioners), tiny bills, gets approx 2.5K a month in pension/related benefits and last I spoke to my cousin, has an eye watering amount of money across multiple accounts and fuck knows how much cash stuffed into shoe boxes in her cupboard, floor to ceiling, and under her bed.

Even someone who’s never worked, lived in council housing their entire adult life is ridiculously comfortable finance wise.

And you get the Gov saying that £300 a month is enough for an unemployed 25 year old to live on. Sure Jan.

As a couple we have worked 80 weeks most of our adult life. In high stress jobs that have required a lot of travelling. We have paid all our childcare costs (UC didnt exist) and saved hard and paid into the NI pot vast amounts of tax. Expecting some of this to provide a pension when we retire.

I dont agree that pensions should be means tested - why should we subsidise someone who couldnt be bothered to work long hours/didnt save/ or took time off to look after their kids?

Maybe UC should be relooked at to reduce costs so people work longer hours (we need more workers at the moment anyway) and try and get the fathers to pay more.