‘Unsustainable’ – Iceland boss and Labour peer calls for end of triple lock pension
Lord Walker, the influential Iceland boss who was made a Labour peer, has called for the triple lock pension to be scrapped as the mechanism was “profoundly unfair”.
In a debate on welfare reform in the House of Lords, Walker added to a growing number of economists and political figures calling for the state pension system to be replaced over its spiralling costs.
The triple lock means the state pension increases by the highest of average earnings, inflation or 2.5 per cent each year, often leading to pensioners receiving increases significantly above workers’ wage growth.
The policy is backed by all main political parties some 16 years after former chancellor George Osborne introduced the uprating mechanism in an effort to reduce pensioner poverty.
Walker, who is the government’s “cost of living champion”, said “we all know” the triple lock pension had to be scrapped yet that it was “politically untouchable”.
“Let us jettison the worn-out stereotype of who constitutes the biggest drain on our benefits system,” Walker said.
“We should have the courage to challenge the pensions triple lock. It is mathematically unsustainable, politically untouchable and profoundly unfair: we all know it.”
Triple lock pension is ‘immoral’
His comments follow similar criticisms made by the Resolution Foundation this week, the think tank that was headed by Treasury minister Torsten Bell.
The think tank said in a report that the state pension was around £12.6bn higher than it would have been should the government have introduced a “smoothed earnings link”, which it argued would be more sustainable for public finances.
The proposal would mean that in years where price inflation exceeds earnings growth, the state pension would rise in line with prices temporarily before then not increasing to a level as high as the average earnings. It would ensure that in the long run the state pension would “keep track” with earnings.
Former prime minister Tony Blair and Jeremy Hunt have also called for the triple lock to be replaced, with the latter claiming in an interview with CityAM the policy was “immoral” and a “drag anchor on economic growth” given the cost to the public finances.
Other think tanks and organisations have called for other alternatives to the triple lock pension. The Centre for British Progress said the triple lock should rise according to a 10-year average in wage growth or inflation in the previous year.