Paul Johnson, who steps down in two weeks after 14 years leading the influential think tank, told The i Paper: “It can’t go on forever. You’ve got to stop at some point.”
Introduced in 2010 by then-Chancellor George Osborne, the triple lock guarantees that state pensions rise each April by whichever is highest of inflation, earnings growth, or 2.5 per cent.
Labour has pledged to maintain the triple lock until the end of the Parliament. But with the state pension – which is currently £230.25 a week for those on the new rate and £176.45 on the basic rate – forecast to cost £145.6bn in 2025/26, calls for reform are intensifying.
Mr Johnson said: “We, at the IFS, think it should get to 31 per cent or 32 per cent – maybe a third of median earnings – [and the Government] should keep the triple lock until it gets there.
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“It gives the Government certainty about what they’ll end up paying in the long run and it gives pensioners more clarity about where it’s going to end up.”
Instead, he proposes a “smoothed earnings link” – a policy recommended by the Work and Pensions Select Committee in 2015.
Torsten Bell, the pension minister, also previously supported the idea, saying: “Switching pensions to the same smoothed earnings link proposed for working-age benefits would gradually save 0.5 per cent of GDP compared to current plans by the 2040s, offsetting over half of the higher cost that comes from pegging working-age benefits to wages.”
The effect is that over time, gains are compounded, as pension increases at a far faster rate than workers.
“It worries me that the Government might mess around with pension taxation in a way which is damaging.
“And if they would do it, it would hit an awful lot of nurses and teachers, including a lot who don’t think of themselves as being higher-rate taxpayers because of the way that system works.
The Isle of Man recently reversed plans to adopt a double lock, illustrating the political risk of altering pension policy.
He added: “On the spending side, I would look to end the triple lock as soon as possible.
Mr Johnson believes Reeves is navigating that tension, adding: “I think she does want to do the right thing.
The Treasury has been approached for comment.
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