Labour has re-affirmed its pledge to keep it through the next parliament, despite a government-commissioned report on the future of the state pension today calling for it to be scrapped.
This morning John Cridland published the findings of his root and branch review of the state pension which will be used by government to frame future policy.
As well as calling for an acceleration in the rise of the state pension age (SPA), Cridland recommended the triple lock should be withdrawn in the next parliament in order to ensure ‘fiscal sustainability’.
The triple lock was introduced by the coalition government and increases state pension payments each year by the higher of earnings, prices or 2.5%.
Dropping the triple lock would mean the state pension would account for 5.9% of GDP by 2066/67 rather than 6.7%, the report said.
The Conservative government has pledged in its manifesto to keep the triple lock through this parliament but has not committed to it beyond 2020. Labour however has gone beyond this Tory pledge and said it would keep the policy in place beyond 2020 through the next parliament.
When asked by New Model Adviser® if Labour is sticking by this pledge in light of Cridland’s independent report, shadow pensions minister Alex Cunningham (pictured) confirmed there has been no change in this policy.
‘This is about political choices. Contrary to the review’s recommendations, Labour is also committed to maintaining the triple lock through the next parliament to ensure dignity and security in retirement for future generations,’ he said in a statement.
Cunningham also said Labour is not supportive of Cridland’s proposal to increase the SPA on the basis it would penalise the least well off.
‘We cannot support the review’s recommendation for a faster increase in the state pension age,’ he said. ‘With the gap in healthy life expectancy remaining at over 20 years between the richest and the poorest, these measures will hit those on the lowest incomes, sick and disabled people, many of whom will struggle to reach retirement under the plans.
‘I had hoped we would see ideas come forward in relation to a variable state pension age though we recognise the complexities of doing so. Labour has commissioned its own work in this area to see how the pensions and social security system could better work for those unable to work to the current and future SPA.’
He did however welcome the increased support for carers which the report recommended.
‘Anything we can do to protect the dignity of carers in retirement would be a major step forward in pension policy.’
Cridland is not the one who has called for an end to the triple lock; the work and pensions select committee has called on it to be scrapped by 2020, along with former pensions minister Ros Altmann and former work and pensions secretary Iain Duncan Smith.
Labour MP and chair of the work and pensions select committee Frank Field said today: ‘I welcome this [Cridland’s] report and in particular the recommendation that the triple lock be replaced by an earnings link from 2020.’
Tom Selby, senior analyst at AJ Bell, said Labour’s commitment to the triple lock ‘makes little sense’.
‘By definition it only benefits those over state pension age. Furthermore, the cost versus moving to an earnings link is unknown and depends entirely on inflation and earnings figures between 2020 and 2025. This promise could cost billions of pounds, or it could cost nothing,’ he said.
‘It also seems odd to commit to the triple-lock – a potentially significant spending commitment – when Labour has not completed its own review of the current system. Surely this forms part of any alternative reforms it is going to carry out? That said, it is good Labour is conducting further work on state pension reform, particularly around making the system fairer.’