State pension fury: Scrapping triple lock risks fuel poverty and ‘betrays pensioners’
State pension: Expert discusses when payments are made
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This week is pension awareness week as charities and organisations come together to educate people on how to make the most of their retirement. Multiple organisations have published research to coincide with Pension Awareness Day, highlighting the lack of pension knowledge that remains so prevalent amongst savers. Research from the Pensions and Lifetime Savings Association, for example, found that many remain “in the dark” about pension basics, with over three-quarters (78 percent) unsure on how much the state pension is for retirees. Pensions have been a subject of controversy in recent weeks, especially after Prime Minister Boris Johnson and his government decided to suspend the triple lock.
The triple lock pledge, which was in the Conservative Party’s 2019 manifesto, meant that the state pension would always increase with the highest of inflation, average earnings or 2.5 percent.
But the pandemic has led to distorted earnings figures – 8.3 percent – which would have been an unfair rise for younger taxpayers to pay for, the Government argued.
The Government has said the measure will only last for one year, but former Shadow Chancellor John McDonnell claimed recently that removing the triple lock risks fuel poverty for those reliant on the state pension.
He told the i newspaper: “If Rishi Sunak presses ahead with scrapping the triple lock this year it would be a betrayal of UK pensioners.
“UK pensioners have been ripped off for four decades since Margaret Thatcher cut the earnings link.
“The triple lock had cross-party support because it began to right this long-standing wrong.
“To scrap it now would be a betrayal of pensioners and risks more pensioners falling into fuel poverty this winter.”
It is estimated that pensioners will be £13,000 worse off by the time they turn 85 after the suspension of the state pension triple lock as they miss out on the boost in income.
Helen Morrissey, of stockbroker Hargreaves Lansdown, told the Telegraph that the triple lock suspension would be a bitter disappointment for pensioners.
She said: “It would have put an extra £14.90 per week into their pockets if they were on the new state pension and £11.42 for those on the basic state pension.”
The state pension is worth £9,350 to those who retired after 2016 with 35 years National Insurance contributions.
An 8.3 percent increase would have pushed this to £10,126 in April 2022. A 2.5percent increase will make the pension £9,584. The difference between the two accumulates takes the figure to a £12,986 loss over 19 years, Telegraph analysis showed.
Ms Morrissey added: “Many would think it unfair for pensioners to receive a big increase while a number of workers are still struggling with the fallout of the pandemic.”
However, economist at the free-market Institute of Economic Affairs, Julian Jessop, told Express.co.uk recently that the triple lock was never a sustainable policy.
He said: “I think it was right for them to change the triple lock for this year at least, I wouldn’t have done it necessarily in the way that they have done, I would have retained some form of link to average earnings.
“I would have used some underlying measure to be more consistent with the manifesto.
“As it happens though, the pension will probably come to a similar place as inflation is likely to be between three and four percent.”
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Craig Berry, a reader in political economy at Manchester Metropolitan University, wrote for the Guardian last week that suspending the triple lock could also be bad news for young people.
He argued the triple lock being unfair for the younger generation is a “false presumption”.
He added: “We can and should spend more on social security for young and old people alike.
“More important, because the triple lock will have been in operation for decades by the time younger people reach retirement, they will benefit from pensions that are far greater than those of today’s retirees – such is the power of compound growth over time.”
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