The Government faces several challenges when deciding what to do with the triple lock policy and future state pension increases.
State pensioners are due to get an 8.5 percent payment increase in April, after payments increased 10.1 percent the year before, raising the question of how much longer the triple lock will be affordable.
Emily Campbell, lawyer at Charles Russell Speechlys, told Express.co.uk: “In the current debate surrounding the reform of the triple lock, it’s paramount that the Government considers the intricate balance between the needs of pensioners, fiscal affordability, and intergenerational fairness.
“While we must acknowledge the importance of providing a fair state pension to support our elderly population, we cannot ignore the pressing need to control inflation.”
She said one consideration that supports reforming the triple lock is the disparity between the state pension and how private pensions increase.
She explained: “Private pensions often do not receive as generous increases, with guaranteed raises typically capped at the ‘worse of 2.5 percent or CPI,’ in contrast to the ‘better of’ approach under the triple lock.”
In contrast, she said one factor that goes against making the state pension increase less generous is the fact personal allowances and tax bands are not rising in line with inflation.
Ms Campbell said: “This effectively means that the Government claws back some of its generosity through the tax system. Altering the circumstances of existing pensioners can be a complex and delicate matter.
“The focus should therefore be on devising a comprehensive, long-term plan that offers individuals sufficient pre-emption and opportunity to adapt their financial strategies.”
With the 8.5 percent increase, the full basic state pension will increase to £169.50 a week while the full new state pension will go up to £221.20 a week.
Retirement specialist Gary Smith, from Evelyn Partners, previously told Express.co.uk the costs of the state pension are mounting.
He said: “There’s no doubt the 10.1 percent increase in this financial year and the 8.5 percent increase due in April have focused attention on the triple lock – even though its defenders would say that is exactly why it exists, to protect pensioners against high inflation and to maintain their minimum living standard in line with wider society.
“It seems unlikely that increases of the same magnitude will follow in subsequent years but as noted, even without that, the expense of the state pension is huge and escalating so if the triple lock were to stay then something would have to give and that would probably be the state pension age.”
The expert warned that extending the state pension age could cause inequality in favouring those who live longer and are better off, while putting the state pension further out of reach for current working age Britons.
He said: “The alternative is finding a mechanism that results in less dramatic increases in the value of the state pension, whilst also providing a decent minimum standard of living for retirees who rely on it and meeting generally accepted principles of fairness.
“A Labour Government might find it easier to address this as older cohorts tend to comprise less of their core support than is the case for the Conservatives.”
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