This year the Government scrapped the earnings element of the triple lock, in what it claimed was a one-off measure in desperate times. Don’t believe it. It is only a matter of time before someone in government takes the axe to it.
The decision to downgrade the triple lock means that pensioners will get a pay rise of just 3.1 percent from April, while inflation is set to hit six or seven percent.
I expect the triple lock to be restored next year, as the Conservative Party battles to claw back its vanishing popularity, but that will only be a temporary reprieve.
The Treasury hates the triple lock and can’t wait to see the back of it, because it thinks it is unaffordable.
It’s living on borrowed time.
The State Pension costs the nation almost £100 billion every year and makes up 12 percent of total public spending.
As the country ages, the bill will mount.
Every one percentage point increase in the State Pension adds almost £1 billion to its cost. This money has to be found from elsewhere.
The only reason the triple lock hasn’t been scrapped yet is that politicians are terrified of the backlash when it is. They know that whoever makes the decision will never be forgiven.
Our State Pension is already one of the worst in the developed world, and scrapping the triple lock will double down on that.
Yet politicians will claim they have no choice.
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Britain is a country deep in debt. It owed more than £2.3 trillion last November. That is equivalent to 96.1 percent of our entire economic output in a year.
This isn’t a one off, caused by the pandemic (and the financial crisis before that). The UK has been living beyond its means for half a century.
Incredibly, the Government has delivered just seven budget surpluses in the last 47 years, and they are getting ever rarer.
The Millennium has seen just two budget surpluses, in 2000/01 and 2018/19.
Since 1970, the average annual budget deficit has run at 3.6 percent of GDP.
There is no pot of money paying for the State Pension. Instead, it is funded by taxing today’s workforce.
The big problem is that the ratio of workers to pensioners is set to shrink as birth rates fall and people live longer.
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In the mid-2020s, every 1,000 workers will have to fund the State Pension for 280 pensioners. By 2045, they will have to support 341 pensioners.
The burden will continue to rise after that.
By then, the triple lock will be long gone. A relic from history. We will all be working longer, too.
The State Pension age may have to hit 70 by 2040, according to the International Longevity Centre-UK (ILC).
That may be fine for those who are healthy, but will be a nightmare for anyone who falls sick in their 50s or early 60s.
They will have to scrape by on whatever benefits are on offer, until they finally qualify for their State Pension.
And when they do, it may be worth even less than today in real terms.
The triple lock can’t survive. We’ll all miss it when it’s gone.
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