Covid-19 Benefits Could Drag 700,000 Retirees Into Poverty
Retirees could lose pension protections through the triple lock guarantee in order to help fund the support offered to the UK public during the lockdown.
According to research from thinktank, Social Market Foundation (SMF), state funding will need to be significantly reduced in the years ahead in order to recoup the current state borrowing which could exceed 14 per cent of the UK’s GDP by the end of 2020.
The SNF claim that future austerity approaches should not protect state pensions if working age benefits are impacted and reduced.
This could mean that the triple lock guarantee, which promises pensions to increase by at least 2.5 per cent each year or the average earning growth of the highest earners, could be placed at risk.
The briefing paper suggests that reducing the triple lock to double lock protection could save the government around £20 billion over a five year period.
Whilst the UK will need to help reduce the debt incurred during the lockdown, Age UK has estimated that breaching the triple lock guarantee will drag 700,000 retirees into poverty by 2050.
Scott Corfe, research director at the SMF, says:
“Quite rightly, society is making sacrifices to protect its elderly right now. There is a clear case for intergenerational reciprocation when it comes to meeting the fiscal costs of the crisis in the years ahead.
“The crisis has emphasised our obligations to other generations, even in the face of personal sacrifice. This spirit must be maintained when the dust settles, with the economic costs of responding to the crisis shared fairly across the generations.”
Ian Browne, pensions expert at Quilter, commented:
“If there is no departure from the triple lock it will only place increasing pressure on this government to address the state pension age.
“Increasing the state pension age to much later in life is the alternative means of reducing the future cost of retirement benefits, but would have greater harm on future generations.”