The recent deal between the Conservatives and the Democratic Unionist Party will see the pension lock being maintained throughout the UK.
The deal comes after two weeks of talks following the election result, with the Conservative party eager to reach an agreement with DUP in order to form a government.
During the six-week campaign, the future of pensioner benefits became a contentious issue, as both Chancellor of the Exchequer and Prime Minister Theresa May refused to confirm the maintenance of Triple Lock. This was put under further question by the Conservative manifesto, which stated that it would be reduced to a Double Lock in 2020.
Commenting on the deal was Tom Selby. The AJ Bell Senior analyst highlighted the importance of maintaining the Triple Lock, especially for preserving the confidence and loyalty of the older generation.
“Political necessity has once again trumped long-term thinking when it comes to the state pension triple-lock. The policy has simply become a symbol for doing right by older people, and as a result, there has been little serious debate over its purpose or sustainability.”
Whilst recognising the symbolism of maintaining the triple lock, he also questioned the real impact of a reduction, stating: “The reality is the triple-lock is a random mechanism for ratcheting up the value of the state pension during periods of low inflation and average wages, without any clear destination or justification.
“Indeed, moving to a double-lock of earnings or inflation is unlikely to cost a lot less in the short-term – and could cost nothing at all if either remains above 2.5 per cent between now and 2022.”
Also sharing his thoughts on the deal was Steven Cameron. The pensions director at Aegon echoed Selby’s thoughts, stating: “News that the triple lock will remain until 2022 will be welcomed by those who feared replacing it with a double-lock without the 2.5 per cent underpin would mean pensioners lost out.
“But in practice, if as many expect inflation remains above 2.5 per cent in the coming years, it will actually may make no difference whatsoever. The bigger question is for how long future governments can keep it in place. With an increased focus on intergenerational fairness, constantly prioritising retirees over those of working age could become increasingly politically difficult.”
