With Theresa May calling a general election for 8 June 2017, pension experts wonder whether the election puts the triple lock at risk and how this might change pension policy.
The triple lock increases state pension payments annually by either inflation, average earnings growth or 2.5 per cent, whichever is highest.
The state pension is one of the biggest costs to the public purse, and set to grow as the baby boomer bulge reaches retirement age over the coming years. The Office for Budget Responsibility (OBR) projects it will cost 6.2 per cent of GDP in 2036, up from 5.2 per cent today, even though the state pension age is due to increase to 68 by then.
In his report into the state pension age published in March, Sir John Cridland noted if the same rise in spending were faced today, this would be equivalent to a rise in taxation of £725 per household per year. The report recommends scrapping the triple lock.
Another report suggests that keeping the pensions 'triple lock' beyond 2020 will result in the state pension age increasing above the average life expectancy for men who live in deprived areas.
The Conservatives previously pledged to keep the triple lock in place for this term in parliament. This commitment will end in June and the party has not stated its position on the future of the triple lock yet. Labour has pledged to keep the triple lock in place until 2025.
The over-55s are a key contingent in the general election as they exercise their vote more frequently than younger counterparts. In the last general election in 2015 those aged 55-64 had a 77 per cent turnout and those 65+ had a 78 per cent turnout, according to statistics from Ipsos MORI. This compares to those aged 18-24, with a 43 per cent turnout. However, the over-55s are predominantly Tory supporters.
Old Mutual Wealth surveyed 1,000 voters aged 55 and over, and asked if the threat to the state pension triple lock would change their voting habits. One third of those surveyed said they were less likely to vote Conservative if the triple lock was at risk.
Jon Greer, pensions expert at Old Mutual Wealth, comments: ‘The issue of the triple lock has now become not just a key long-term decision but a crucial election battleground, with all parties under pressure to set out when they think we should be able to retire and how they plan to create an economy that supports longer working lives.’
Richard Parkin, head of pensions policy at Fidelity, agrees that the triple lock is an important election issue. He says: ‘I expect triple lock and pensioner benefits in general to become an election issue as Mrs May could feel she can be tough without alienating too many voters.’
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