Faster state pension age rise floated amid triple lock axe call

There is an argument for raising state pension age faster, a leading pensions expert says, as former Pensions Minister Ros Altmann called for the triple lock to be scrapped. Tom McPhail, head of retirement policy at Hargreaves Lansdown, said there was also a “strong case” for using a dedicated pensioners’ RPI measure for inflation-proofing the state pension.Baroness Altmann proposed this weekend that the 2.5% element should be scrapped from 2020, turning it into a double lock, based on inflation and earnings.She said it was unsustainable due to the huge cost – a point which Mr McPhail agreed with.He cited a DWP forecast of the cost of the Triple Lock in July 2011 which indicated that it could be as high as an extra £45 billion by 2025/26.He said: “There is a strong case for using a dedicated pensioners’ RPI measure for inflation-proofing the state pension, rather than either a triple lock, or the double lock proposed by Ros.“A review of state pension inflation-proofing policy could throw other elements into the mix. Next year sees a long-scheduled review of state pension ages. There is an argument for raising state pension age faster, modifying the triple lock and at the same time further increasing the level of the state pension.“The new single tier state pension is worth around £8,000 a year; if this could be pushed up nearer to £10,000 a year, then having to wait a couple more years to receive it and sacrificing the triple lock might be acceptable compromises.”Elaine Turtle, director at DP Pensions, said: “I have to agree with Baroness Altmann’s comments surrounding the state pension tripe lock and that a double lock is far more practical. The issue with any of these initiatives is how do we guarantee it and how do we pay for it. With changing demographics, the pension system just gets more and more expensive and fundamentally, it comes back to how much tax people are prepared to pay to have this.”Andrew Pennie, head of pathways at Intelligent Pensions said: "The triple lock and the current low inflation economy means that state pensions are increasing at 2.5% per annum and therefore growing in real terms. As Ros points out, over time this can’t be sustainable and why should state pensions grow in a low inflation economy but remain flat in a higher inflation economy?"Given that inflation and growth in average earnings could become negative, we believe a double lock would be unacceptable and perhaps the triple lock can remain, and is in fact necessary, provided the 2.5% escalation rate is reviewed and better reflects current economic conditions."To break the triple lock becomes another broken political promise, more damaging because it would likely cost votes."However, as the cost of providing it continues to increase and the government comes under financial pressures from elsewhere, it will be difficult for the triple lock to continue in its current guise."Claire Trott, director and head of pensions technical at Talbot and Muir, said: "The triple lock has been a key way to protect and bring pensioners income up to a more reasonable level. As with all policies, especially those that have a high cost attached should be reviewed on a regular basis. The promise is only in place until 2020 so there is still plenty of time for the Government to review this nearer the time. The 2.5% is an arbitrary figure which could be removed or changed in line with economical circumstances at the time."It is essential to protect the state pension and to keep pensioners above the poverty line but we have to be reasonable and not give more to one age group than another. The state pension is heavily relied upon by many now, but if auto enrolment is a success then hopefully this will be less so in the future."The Government indicated to the national media at the weekend it was still committed to the triple lock, which was a Conservative party manifesto commitment.

Faster state pension age rise floated amid triple lock axe call

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