The Institute for Fiscal Studies (IFS) said in a report that an ageing population will mean the country cannot meet its growing state pension bill, with the lock set to cost an extra £40bn by 2050.
Without changes to the state pension age, which is currently 66 but is rising to 67 between 2026 and 2028, the IFS is concerned that the triple lock will cost taxpayers billions more and become unsustainable.
The report said: “Increases in the state pension age required to keep spending on the state pension below a certain level of national income would have to be substantial.
In April, the state pension went up by 4.1 per cent, making it worth £230.25 a week for the full, new flat-rate state pension and £176.45 a week for the full, old basic state pension. A rise of £472 a year and £363 a year respectively.
Speaking to The i Paper earlier this year, Jonathan Cribb, associate director of the IFS and head of retirement, savings and ageing, was unconvinced this would solve the problem though.
square PENSIONS I gave up on transferring my pension to one pot as it was too complicated
Read More
According to IFS estimations, the protection adds £11bn a year to Government spending.
“And if the economy does really badly, it will cost a load of money. I think that’s difficult for public finances.”
The report also referenced a previous Government review of the state pension age by Baroness Neville-Rolfe, which said it would have to rise significantly to prevent costs from rising dramatically.
This would raise the level of the state pension to 33 per cent of average earnings from just over 30 per cent today but add £15bn to annual public spending by 2050 compared with lifting it in line with wage growth.
He said it “can’t go on forever” and said that once the state pension reaches 33 per cent of average earnings under the triple lock, it should be removed.
It said by doing this, financial security in retirement would improve and boost nationwide pension savings by £11bn.
“Without decisive action, too many of today’s working-age population face lower living standards and greater financial insecurity through their retirement.”
The Government has been contacted for comment.
Read More Details
Finally We wish PressBee provided you with enough information of ( Scrap triple lock pension to avoid raising retirement age to 74, IFS warns )
Also on site :