by Glyn Jenkins, UNISON head of pensions
Rishi Sunak has finally announced the complete U-turn on the government’s pledge to retain the triple lock for increasing state pensions.
Under the triple lock, pensions increase by inflation, the increase in earnings between May and July or 2.5%, whichever is the greater.
Breaking the promise on the triple lock means that all pensioners and all taxpayers paying national insurance will be ripped off.
The end of the job retention scheme and employees coming off furlough may distort the measure of average earnings but there is no excuse for not using the underlying earnings increase that could be between 3.4% and 4.5%.
That is higher than the flawed inflation index that understates inflation ie the consumer prices index (CPI) or the 2.5% default increase.
All the £5 billion from triple lock has just been banked by the government – leaving pensioners to have their income squeezed and leaving public services still woefully underfunded.
There can be no excuse for not applying the underlying rate of salary increases. We cannot trust a government that breaks this manifesto pledge. We must ensure that that the triple lock is retained for the future and the Westminster government makes good any loss to the relative value of the state pension.
Restricting the increase in state pension does not address intergenerational unfairness, it makes it worse. The triple lock is not only fair to younger generations but essential especially for those that will have to rely on the State Pension for a high proportion of their retirement income when they reach retirement.
The removal of the triple lock completely would mean the relative value of the state pension would start to decline again as it did between 1980 and 2003 when it was only linked to price inflation.
Younger workers need the triple lock to survive for them, so they too can have a decent state pension when they finally reach state pension age.
Continuing declines in the coverage in defined benefit workplace pensions in favour of defined contributions schemes means an increasing proportion of the current workforce are facing an uncertain future and are likely to have significantly lower income in retirement.
Minimum employer contributions to auto-enrolment arrangements mean almost certain pension poverty for care workers. UNISON’s calculations show that care workers, predominantly low paid women, will have to rely increasingly on the state pension to survive.
Any reduction in the projected relative value of the state pension could have dire results for them. That’s why UNISON will continue to lobby to retain and restore the triple lock.
Cutting the relative value of the state pension is a false economy and far from reducing the impact on taxpayers it is likely to increase it for the future in terms of increasing welfare support.