The Institute of Fiscal Studies (IFS) has said the Conservative plan to move from a triple lock to a double lock on the state pension will do little to improve affordability in the long-term.
Yesterday the Tories announced a plan to drop the triple lock from 2020 and replace it with a double lock which would see the state pension increase by earnings or inflation – whichever is highest (under the triple lock the state pension increases by 2.5% if the other two factors are lower).
However the IFS has claimed this proposal ‘does little to resolve the pressures an ageing population will put on the public finances over the years to come’.
The economic think tank estimates that keeping the triple lock in place would mean state pension spending would amount to just over 7% of the national income by 2065-66.
However, as the Tories called for, moving to a double lock would only see state pension spending 0.2% lower of national income (around £5 billion) over the same period.
Carl Emmerson, IFS deputy director, and Andrew Hood, senior research economist, said in the report the reason for this similar spending commitment was because earnings and inflation are rarely above 2.5%.
‘Hence getting rid of the 2.5% element of the triple lock does little to change the projected long-run generosity of the state pension,’ the pair said in the report.