State pensioners have been warned the Government may soon be forced to ditch the triple lock policy as the yearly payments increases become unaffordable.
Neil Rayner, head of Advice at wealth management firm True Potential, warned it is starting to look “inevitable” that a future Government will have to alter the policy.
He said: “The UK has an ageing population and one day there may simply not be enough workers to pay for the upkeep of the state pension.
“In the Government’s most recent state pension age review, it predicted that by 2070 we will see the number of pensioners per 1,000 working people rise from 280 to 393. This is a huge increase and will put a significant strain on public finances.”
He said one alternative that has been put forward is to move to a means-tested metric for the yearly increase with the amount depending on each individual’s financial situation.
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He added: “Any proposed changes would need to be carefully considered, taking into account the impact on pensioners and the political implications.”
The question of how viable the triple lock is has been raised in recent weeks after it was reported ministers were looking at tweaking the policy for next year.
State pensioners are on track for an 8.5 percent increase next April in line with the figure for the rise in average earnings for the three months to July.
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But ministers are said to be looking at using the average earnings figure not including bonuses which would hike payments just 7.8 percent.
Mr Rayner said going for the lower amount would save the Treasury up to £1billion but would be politically risky for the Government.
He said: “With public finances having been squeezed this may be appealing to the Government.
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“However, policymakers will be wary of a backlash from pensioners, particularly with an election on the horizon.
“For those planning on relying on the state pension to make ends meet, it will be vital to plan ahead as much as possible to make sure a 7.8 percent rise would leave enough money for necessities.”
The full basic state pension is currently £156.20 a week while the full new state pension pays £203.85 a week.
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