The state pension triple lock must be scrapped immediately, an influential think tank formerly run by the Pensions Minister has said.
The Resolution Foundation has published a new report titled “What a Racket”, which has urged Chancellor Rachel Reeves to take action to end the measure used to determine how the state pension should rise each year.
The current Pensions Minister, Torsten Bell, led the Resolution Foundation from 2015 to 2024.
As well as Bell, a number of other Government roles are occupied by former employees of the think tank.
Under the triple lock mechanism, the state pension will rise annually by whichever is higher: the rate of inflation, average earnings, or 2.5 per cent.
The policy was first introduced by the coalition Government in 2012 but has remained in use ever since.
The Resolution Foundation’s report stated: “The ratchet built into the triple lock means that the value of the state pension ends up depending not just on the level of inflation and how fast earnings are growing, but also on how volatile they are.
“Crucially, the ratchet pushes up the state pension precisely when economic volatility is highest, such as during downturns, or during bouts of cost-push inflation, thereby increasing the riskiness of the public finances.
“It is impossible to justify why our generosity to the older population should be a function of economic volatility.”
Instead of the triple lock, the authors of the report have called for the use of a “smoothed” earnings link.
Under the proposal, the state pension would rise in line with earnings growth or inflation, but would be capped if temporary price shocks, such as those caused by the Ukraine war, led to anomalies.
The policy’s adoption would save the Treasury around £650million a year in 2029-30, according to the think tank.
Resolution Foundation chief executive Ruth Curtice said: “The pensions triple lock is a terribly designed policy that has proven to be far more expensive than originally planned, far less effective at reducing poverty than many hoped, and risks causing further economic harm if it continues for much longer.”
She added: “We cannot afford to keep this policy for another parliament. The government should call time on the triple lock as soon as possible and put the savings to far better use.”
A number of recommendations from the Resolution Foundation have ended up resembling Labour Party policy.
The Employment Rights Act introduced by the Labour Government under Sir Keir Starmer includes measures the think tank had urged be adopted.
Other Government policies resembling the Resolution Foundation’s recommendations include the expansion of statutory sick pay, a Fair Pay Agreement for adult social care, and a change in the way zero-hour contracts are used by businesses.
A Department for Work and Pensions spokesman said the Government remained committed to the triple lock policy until at least the next general election.
He said: “Supporting pensioners is a priority and we have committed to the triple lock for the rest of this parliament.
“The Pensions Commission is examining how we can ensure secure retirements for tomorrow’s pensioners, while our newly passed Pension Schemes Act will bring about major reform to the UK pensions system, benefitting millions of workers to the tune of up to £29,000 by the time they retire.”
