On the go: The pensions triple lock should be scrapped following the coronavirus crisis so that all generations pay their fair share to meet the costs of the pandemic, according to a think tank.
A briefing paper from the Social Market Foundation, published on Tuesday, has called on the government to replace the current system for uprating the state pension with something more affordable, as a way of reducing the deficit that has built up due to Covid-19.
The significant economic cost of the emergency measures and financial aid deployed to handle the crisis must be shared fairly between the older and younger generations, and cutting the triple lock could be a good way of ensuring this, the think tank stated.
Scott Corfe, research director at SMF, said: “There is a clear case for intergenerational reciprocation when it comes to meeting the fiscal costs of the crisis – something that could be a feature of the policy landscape for years to come.”
Under current rules, the state pension is increased using the triple lock, which is the highest of earnings growth, price inflation or 2.5 per cent a year.
Mr Corfe has suggested replacing this with a double lock, which would tie increases to earnings or inflation – whichever is higher.
He said: “This could contribute £20bn to deficit reduction over the next five years. Pensions would still rise, but less quickly, reducing the fiscal burden on the working-age population.
“In the context of an annual deficit that could reach £200bn as we emerge from the crisis, this is not too much to ask. It would also demonstrate reciprocity from a group whose wellbeing was, rightly, prioritised during the lockdown phase of the crisis.”
This article originally appeared on FTAdviser.com
