State pension triple lock ‘will be broken’ says Halligan in June
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At present, the state pension increases each year in line with the rising cost of living seen in the Consumer Prices Index (CPI) measure of inflation, increasing average wages, or 2.5 percent, whichever is highest. Average earnings have been the key part of the debate in recent months – official forecasts suggest that average earnings will be the highest of these three, by a considerable margin. Predictions by the Bank of England suggest that average earnings could go up by 8 percent.
This has sparked concerns that young people, who have suffered from unemployment or wage reductions during the COVID-19 crisis, may end up paying more for state pensions of older citizens.
As a result, Cabinet Ministers believe it would be “grossly unfair” for pensioners to benefit while national insurance is increased for workers, the Telegraph reported.
One told the newspaper: “It has got to go”.
Another Cabinet Minister said: “You are excluding the people who actually need this [social care reform] while hiking taxes on the young, so there is a difficulty in the optics of that.
A third said: “Youngsters have had a hell of a time, they’ve had a clobbering, we’ve got to think about them. Why should they be picking up the tab at the moment.”
However, a move to modify the triple lock could prove politically divisive given the Conservative Party pledged in 2019 to keep the policy.
Pension expert Steve Cameron told Express.co.uk last month Mr Sunak will probably have to at least partially break his 2019 manifesto pledge to maintain the triple lock.
He said: “The Conservatives vowed to keep the triple lock in 2019, but quite clearly at that point we were about to have a pandemic. The world has changed.
“When something significant changes, I’m not suggesting you should give up manifesto pledges without serious thought, but sometimes for fairness you might need to make changes.
“I would be surprised if Rishi isn’t at least considering changes.”
Mr Cameron explained that the Chancellor won’t want to make drastic changes, but will nevertheless want to ensure the system is made fairer.
He highlighted certain impacts of the pandemic that have affected pensions, and how Mr Sunak could seek to correct this.
The impact of furlough, for example, could be taken out of the earnings figures to create a more accurate figure.
Mr Cameron continued: “I think he will want to stick to the spirit of the triple lock, so I don’t think for a minute he will scrap it entirely.
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“I think he will try and adapt the triple lock given the way earnings have moved. He could possibly smooth the earnings figures over two years or maybe even three years.
“An alternative is to strip out the effects of the pandemic on national average earnings growth, and that’s the one that has been talked up in recent months.
“There will be an adjustment, it will be to use the average figures or take out the distortions caused by furlough and the pandemic.”
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