Conservative and Labour both pledged to keep the triple lock this Parliament, seeing that as crucial to the pensioner vote. Both will keep their promise.
Abolishing the triple lock does not produce any large early cuts in public spending. If undertaken now the Government Actuary puts it at £2bn by 2030-31.
Abolishing the triple lock in the next Parliament would not yield anything like enough savings to pay for a National Care Service free to users.
Questions those wanting to end the triple lock need to answer
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Would they just remove the 2.5% uprating option, leaving a double lock, or would they only link pensions to prices, or to earnings? Leaving pensions linked to earnings will not yield much saving. No-one is suggesting an end to annual upratings. What is their realistic estimate of five year savings from their proposed change? Mr Burnham’s plan of keeping 2.5% or inflation but also some link to wages needs to be explained more clearly.
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Would they change the law to allow them to remove the £100 bn surplus from the National Insurance Fund which currently pays the pensions, or would they abolish the Fund?
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Would they end the Contributory principle for the pension which awards pension to people who have contributed sufficient in National Insurance, or have earned NI credits?
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Are they aware that the current NI Fund is super solvent and is forecast to generate a surplus in each of the next five years by the Government Actuary?
Background.
The state pensions is the only major “benefit” still based on the Contributory principle. Pensioners therefore see it as an entitlement. Critics complain that it is not backed by an endowment fund like private sector pension schemes. They often ignore the fact that the pensions are paid for out of the National Insurance Fund which is an independent government entity with an annual Actuarial review and certificate of solvency. It is as Pay as you Go scheme with working people paying National Insurance Contributions and pensioners drawing out pensions based on their past contributions. It was set up like this to avoid the first generation having to pay twice, paying for their parents already retired and paying to create an endowment for themselves.
The current legal rules require 24% of National Insurance Contributions to be sent to the NHS, and 76% to be paid into the NI Fund. Every year it is decided if the Fund is in surplus or deficit. If deficit the Treasury has to pay a top up grant. This has not been necessary for the last ten years. If surplus the surplus is held in the Fund and cannot be used for other public spending. The Government Actuary this year forecast a growing surplus for the next five years, to take it above £160 bn. The Fund has to keep a working balance surplus to meet payments with a minimum of 16.7% of annual spend. The Actuary confirmed his 2026 forecasts included allowing for triple lock increases in pensions.
This legal structure could of course be changed. Removing the Contributory principle would not be welcomed by many