Saturday, January 18, 2020

Poorest face ‘double whammy’ if Tories ditch triple lock on pensions

Must Read

5,000 sick and disabled people died awaiting benefit repayments after ‘scandalous’ DWP error

"That 5,000 disabled people were denied the proper support to live independently before they died is scandalous."

Citizens Advice demands ‘fundamental overhaul’ of Universal Credit system

"We need to see significant changes to the way the Universal Credit is designed and delivered to ensure it supports the people who need it."

More than 100,000 disabled people lose Motability vehicles when reassessed for PIP

Disability rights charity described the latest figures as a "scandal" and called for urgent reform to the PIP assessment.

DWP slammed over rising number of benefit underpayments

Proportion of benefit claimants who have been underpaid due to official errors has risen by 86% since 2011-12.

Jobcentre staff to target homeless people in new £3m government scheme

Charities say government should focus on the root causes of homelessness and invest in the benefits system.

Powered by article titled “Poorest face ‘double whammy’ if Tories ditch triple lock on pensions” was written by Phillip Inman, for The Observer on Sunday 30th April 2017 04.59 UTC

Plans to ditch the triple lock on the basic state pension would represent a “double whammy” for the poorest pensioners, many of whom have already lost out under this month’s new flat-rate pension, according to a leading pension expert.

Pensioners who rely on the state pension for most of their income will be the biggest losers should the Tories drop the element of the triple lock that guarantees annual rises of at least 2.5%.

Chris Noon, a partner at leading pensions consultancy Hymans Robertson, said linking increases to earnings growth or inflation would, over time, erode the value of the pension and push larger numbers of people into poverty on reaching retirement age. He said: “The low paid were the community most negatively affected by the significant changes to the state pension introduced from April 2016. Removing the 2.5% minimum increase … is a double whammy that would again impact this community hardest over the medium to long term.”

The flat-rate state pension, worth £159.55 a week, combines the basic state pension with pension credit and the state second pension, which previously rewarded low-paid workers with generous top-up payments. Estimates put the savings at £8bn by the end of the parliament. Ending the triple lock would come on top of this cut.

Theresa May is understood to be considering replacing the “triple lock” with a less generous “double lock”, and spending some of the money saved on social care. The triple lock has come under scrutiny since figures showed it was behind a 22% increase in pensioner incomes in the last seven years, while average earnings rose by only 12%. It is understood that Downing Street is weighing up whether a more affordable “double lock” would be seen as a more sensible safety net for retirees.

Craig Berry, deputy director at the Sheffield Political Economy Research Institute (Speri), said reducing the triple lock would have little impact on the government’s finances over the next few years, while the economy remained strong. But without a 2.5% rise when earnings growth and inflation are low, pensioner incomes will fall back and lead to millions of people over the coming decades needing extra state funds.

“The triple lock should be maintained,” he said. “The policy increases the costs of the state pension only modestly, and represents the least the government can do to ensure its value starts to rise, from a very low base, towards the average for highly developed countries.”

Ros Altmann, the former pensions minister, said she was relaxed about switching to a double lock if the savings were channelled into improving the state pension provision that affects older retirees, including pension credit and the state second pension, which have become less generous in recent years. “The triple lock does not apply to pension credit, so it fails to protect the poorest. It doesn’t protect Serps, the state second pension, widows’ pensions, deferred pensions and so on. So politicians have claimed it protects pensioner incomes but it doesn’t do it. Not properly,” she said.

Britain spends about 6% of GDP on the basic state pension and 6% on an array of benefits and earnings-related top-ups, of which the second pension and pension credit are the biggest. © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

Latest News

Free period products to be made available in all schools and colleges in England

New government scheme is designed to combat stigma and tackle 'period poverty'.

Stroke care facing a ‘ticking time-bomb’, says charity

Charity warns that the number of stroke professionals in the UK is at a worryingly low level.

5,000 sick and disabled people died awaiting benefit repayments after ‘scandalous’ DWP error

"That 5,000 disabled people were denied the proper support to live independently before they died is scandalous."

Charity exposes ‘glaring employment gap’ for people with epilepsy

Employment rate for people with epilepsy is far lower than for those with most other disabilities.

One in five adults have experienced child abuse, research shows

ONS research reveals that 1 in 5 adults in England and Wales experienced a form of child abuse before they turned 16.


Get weekly news updates delivered straight to your inbox. Subscribe today!