A state pension age increase to 68 could “speed up” the generation of revenue to pay for the triple lock, a former Government minister has warned.
Former Conservative MP Lord Willetts said there was “precedent and evidence” which suggests the retirement benefit’s age threshold could be raised sooner than previously expected.
He told The i that the Government is set to raise the state pension age to 67 by the next Parliament but noted a “further increase could be sped up”.
Lord Willets explained: “The argument was, if we speed up the increase in the pension age, there will be fewer pensioners, and we’ll be able to pay them a higher pension.
“That was the trade-off on which the triple lock rested when it was first introduced, and it is a reminder that somehow or other these pledges have to be paid for, even with unpalatable measures like that which have come back and proved to be very controversial.”
Ahead of the General Election, Labour claimed they would keep the state pension triple lock, which guarantees the state pension rises each year in line with inflation, earnings or by 2.5 per cent – whichever is higher.
Some commentators have suggested that, while the triple lock provides a vital safety net for pensioner incomes, retaining it will be a challenge, given the ageing population and questions around intergenerational fairness.
Labour has also promised to “undertake a review of the pensions landscape to consider what further steps are needed to improve pension outcomes and increase investment in UK markets”.
Patrick Heath-Lay, chief executive of People’s Partnership, which provides the People’s Pension, said: “I hope that Labour’s pensions review will help revitalise the consensus that drove forward the success of automatic enrolment and create a roadmap for the future.”
He added: “There are also ‘day one’ challenges for the new ministerial team.
“The pensions dashboard programme (an initiative which will eventually enable people to see all their pensions in one place online) is making progress, but ministers must address key project documents which still require approval, and this must happen quickly if larger schemes are to connect to the dashboards’ infrastructure in April.”
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said “constant tinkering” over the years has led to a complex pension tax system.
She said: “An overarching review needs to look at the system as a whole and make sure people are properly incentivised to save without fear of being tripped up by tax changes further down the line.”
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