An accountant has suggested an alternative to the triple lock metric for determining the increase in the state pension.
Chris Demetriou, co-founder of Nottingham-based Archimedia Accounts, said policy makers should look at other countries’ models for a more sustainable alternative.
He told Express.co.uk: “Exploring alternative models like Denmark’s – which retains an inflation floor but does not guarantee annual upratings – deserves consideration.
“This maintains retired clients’ standard of living whilst building in more flexibility if funding pressures emerge.”
He said a “more balanced and sustainable approach” to the triple lock is needed, after the Conservatives suggested increasing the personal allowance for state pensioners, to increase their take-home pay.
Mr Demetriou commented: “Modestly increasing tax allowances for pensioners through measures such as raising the personal allowance could still offer support but in a more targeted way that channels extra funds to those on more modest incomes.
“Reformulating the lock to smooth out increases according to multi-year inflation and wage growth averages rather than annualised figures would also curb volatility risks that can potentially outpace economic conditions.”
His comments come after another pensions analyst suggested an alternative to the triple lock using a three-year average of earnings growth.
Mr Demetriou said any changes to the state pension need to consider the most vulnerable members of society.
He warned: “Naturally, any policy tweaks must avoid harming those most dependent on state support in retirement.
“But with prudence and political will, options surely exist that offer better long-term value for UK pensioners and taxpayers alike. As always with financial planning, gradually adaptive strategies tend to prove most wise and balanced.”
The accountant explained why the sustainability of the triple lock is a growing concern for Government planners.
He said: “Over the past decade it has become increasingly clear that maintaining such a generous uprating mechanism in perpetuity may not prove fiscally prudent going forward.
“As my clients and firm continue planning for both personal and business finances over the medium-to-long term, the Treasury projections show costs rising steeply to £9billion annually if no changes are made.
“We must therefore have an honest discussion about the policy’s sustainability and targeting. With many pensioners now better off than the working generations, is it appropriate that all qualify for these outsized raises year after year?”
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