The end of the triple lock pension could be inevitable due to the increasing cost of providing it to the UK’s aging population, say leading audit, tax and business advisory firm, Blick Rothenberg.
Tomm Adams, a Partner at the firm, said: “We will likely see the triple lock pension end when the current Parliament does, as the cost of providing it to the UK’s aging population is increasing and Government debt is rising.
“The Office for Budget Responsibility (OBR) recently warned that the triple lock pension is set to cost £15.5bn by 2030, three times more expensive than originally expected in 2011 when it was brought in under David Cameron and Nick Clegg.
“The triple lock policy was designed to ensure that the state pension would rise by whichever was highest out of inflation, wage increases, or 2.5%, providing a guarantee that pensions would maintain their value over time.”
He added: “But there has been economic volatility in the UK due to wider world events, meaning the inflation-linked part of the triple lock has kicked in, but tax receipts and wages haven’t increased in line with that inflation, creating the current cost-of-living crisis.
“The State pension is already 5% of annual GDP, and is set to increase significantly in coming years. However, this 5% is rather low compared to other European jurisdictions such as Italy at 10.6% and Spain at 8.9%. But the average British retiree only gets 22% of their pre-pension salary from the state, verses 76% in Italy and 80% in Spain.
“Regardless of the next Government, we will likely see an end to the triple lock and an increasing retirement age. The latter will exacerbate the class divide between those in physically demanding versus those in desk jobs.
“The current and next Government should focus their attention on building an adequate workplace pension system with better financial education for today’s working population, maintaining tax incentives for careful savers, and reviewing employment laws around minimum pensions provision in the workplace.”
