MPs call for state pension triple-lock to be scrapped

MPs have called for the triple-lock on state pensions to be scrapped for being “inherently unstable”.

According to a new report by the Work and Pensions Committee, the state pension triple-lock – which protects annual increases in the state pension – will worsen an economy already heavily “skewed” towards baby boomers and against millennials.

It recommended that all parties must seek “political consensus on a new earnings link for the state pension” before the next general election.

Millennials, born between 1981 and 2000, face being the first generation in modern times to be financially worse off than their predecessors.

With rising house prices and deposits many young people have priced out of homeownership.

The relatively generous final-salary defined benefit pension schemes – which were commonplace for baby boomers  – are also now all but “completely closed” to new entrants.

The triple-lock rises every year in line with wages, earnings growth or 2.5%, whichever is highest.

The report said: “The triple-lock is inherently unsustainable. In the absence of reform the state pension would inevitably grow at a faster rate than the rewards of work and would account for an ever-greater share of national income. In particular, we find no objective justification for the 2.5% minimum increase.”

The Committee proposes that a new state pension and basic state pension should be linked to a minimum proportion of average earnings.

Frank Field MP, chair of the Committee, said: “Homeownership, taken as a given by many in my generation, is out of reach for too many aspiring young people today. At the same time as tightening their belts, they are being asked to support a group that has fared relatively well in recent years.

“Millennials face being the first generation to be poorer than their forebears. No party has been immune from chasing the pensioner vote –but at what cost to future generations? Politicians of all stripes must accept some responsibility for these trends, and we must act together now to address them.

“Great strides have been made against the scourge of pensioner poverty and the new state pension is at a level to provide an effective minimum income and encourage personal saving. It is time for the triple lock to be shelved. The system we propose protects pensioners and allows them to share the proceeds of future good times, but at the same time is inter-generationally fair. We call on all parties to get behind it.”