Scrap triple lock but let retirees access pensions sooner, think-tank urges

The triple lock should be scrapped ahead of replacing the current pensions system to enable people to access funds earlier in life, Sir Tony Blair’s think tank has said. Picture: Getty The triple lock should be scrapped ahead of replacing the current pensions system to enable people to access funds earlier in life, Sir Tony Blair’s think tank has said. A report by the Tony Blair Institute (TBI) said the state pension is “outdated, increasingly unaffordable, and too rigid for the way people live and work” because it concentrates state-supported income support at retirement.It argues that a new “lifespan fund” should be established instead, providing a flexible model that builds entitlement through activities including work, caring and study.Annual contributions to a notional fund would provide up to 20 years of state-backed support at the level of today’s state pension, the think tank said.People could then access some of that entitlement during their working lives to provide income support in “critical periods”, such as during unemployment, retraining or caring.Read More: Scrap triple lock on state pension to fund defence spending, former Bank of England chief economist tells LBCRead More: What is the new state pension age and how much will I receive? Those who choose to access this support would be automatically enrolled into higher national insurance contributions when they return to work, creating a “default path to rebuild what they had drawn down”.The TBI said the triple lock should be scrapped to prevent the state pension rising faster than earnings growth and called for the Pensions Commission to encourage cross-party agreement before the next election.Under the triple lock, the state pension increases every April in line with whichever is the highest of total earnings growth in the year from May to July of the previous year, Consumer Prices Index (CPI) inflation in September of the previous year, or 2.5%.Tom Smith, director of economic policy at the TBI said: “Britain’s state pension system was built for a different era.“We can’t keep pouring money into a system that is increasingly unaffordable.“Pension spending must be contained, and that means the triple lock cannot continue after the next election.“Ending it will require political leadership from all parties – but that should only be the first step.“Real reform must also build a better system: one that is fairer, more flexible, and designed for how people live today.” The report highlights the number of pensioners will rise from 12.6 million today to nearly 19 million by 2070.It added under the current system, state pension spending is projected to rise from around 5% of gross domestic product (GDP) to 7.8% over the same timeframe, leading to higher taxes or rising pressure on public services, or both.The TBI estimates that its proposed model would hold “long-run” state pension spending at around 5.5% of GDP, avoiding roughly £66 billion a year in additional costs by 2070 in today’s terms.Mr Smith added: “TBI’s proposed Lifespan Fund offers that better alternative.“It replaces the one-size-fits-all state pension with a personalised system that people build up through active contribution across their lives.“It gives people real freedom to use support earlier in life – to retrain, care for relatives or manage periods out of work – and to top it back up before retiring on their own terms.”Caroline Abrahams, charity director at Age UK, said the triple lock should be retained into the next parliament, arguing it has helped to improve the living standards of some of the poorest pensioners.She added: “We continue to hear from older people who are struggling financially, and the extra money the triple lock delivers makes a meaningful difference to many lives.“In new polling, three in 10 pensioners say they are struggling financially – even before the worrying rise in energy prices.“Going forward, we need a national debate to determine the purpose and appropriate value of the state pension as, at present, it is set too low to provide those reliant on it with a decent standard of living throughout their later lives.”A Department for Work and Pensions (DWP) spokesperson said: “Supporting pensioners is a priority and our commitment to the triple lock for the rest of this Parliament means millions of pensioners will see their yearly state pension rise by up to £2,100.“The Pensions Commission is already examining how we can ensure secure retirements for tomorrow’s pensioners and for those that have not reached state pension age but need extra support, a range of options such as universal credit and other means-tested and disability-related benefits are available.”

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