State pensioners will continue to get big increases to their payments over the coming years, analysts have said.
Figures suggest the state pension could reach £14,000 a year by 2023 as high levels of inflation continue to deliver large payment increases.
Tom Selby, head of retirement policy at AJ Bell, warned the triple lock will become less sustainable as payments continue to jump up.
He said: “While committing to the triple lock might be viewed as the easy option politically for now, at some point, someone will have to be brave enough to admit this cannot go on forever. If it did, the state pension would eventually be worth more than average earnings.”
The firm calculated if inflation continues to remain higher than expected over the coming years, the full new state pension could pay £14,377.40 in seven years’ time, almost £4,000 more than it is now.
The firm also calculated how much the state pension could increase if the Bank of England’s inflation forecast prove to be correct, in which case it would go up to £13,230.45 by 2030.
Many market analysts were surprised recently when the latest figure for inflation remained at 8.7 percent, when it was expected to fall.
The cost of the state pension for the Government is expected to increase by £23billion in real terms by 2027/2028 compared to the start of this decade.
Mr Selby warned: “The increased spend courtesy of the triple lock represents a massive increase in both absolute and proportional terms.
“Those rising costs will put pressure on current and future governments to either raise taxes, cut spending in other areas or find savings from the state pension system – possibly through a faster increase in the state pension age.”
He also said the very existence of the triple lock indicates current state pension payments are “too low”.
He added: “Rather than randomly ratcheting up the value of the state pension, it would make far more sense for the government to set out what it believes a decent state pension is worth, and then steadily increase the value of the state pension to that level.
“Unfortunately, the triple lock has essentially shut down sensible debate about state pension increases, with politicians seemingly happy to support the promise blindly in order to avoid a potential scrap with older voters.”
Martin Hartley, who is a member of the Bank of England decision-maker panel, previously told Express.co.uk the triple lock policy needs to change.
He said: “The triple lock policy doesn’t fairly reflect the needs of this group of people [state pensioners]. I believe the system needs to be reformed and can’t see it lasting much longer.
“We need to look at introducing a policy that investigates whether a person’s occupation is fit for purpose by looking at their general health and wellbeing. Something needs to change.”
He suggested one alternative could be a single lock policy, using one factor such as inflation or average earnings growth.
He explained: “This would be a more suitable way of assessing the landscape and ensuring everyone is looked after.
“Another strategy is to adjust earnings. Instead of relying on average earnings growth, the Government could implement a policy that considers the connection between earnings and pensions, creating a more flexible system.”
He said ministers could also introduce a means-tested system basing pension entitlement on the financial need of each individual.
The triple lock policy guarantees the state pension increases each year in line with the highest of inflation, the rise in average earnings or 2.5 percent.
The current full basic state pension is £156.20 a week while the full new state pension is £203.85 a week.
People can currently claim their state pension once they reach the age of 66, but this is increasing gradually to 67 and then 68 over the coming years.
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