The U.K. government should consider suspending part of its flagship pensions guarantee, one of Boris Johnson’s most politically sensitive election promises, according to the chairman of the influential Treasury Committee.
The pensions triple-lock — a pledge to raise the state pension every year by whatever is highest out of the annual growth in average earnings, inflation, or 2.5% — looks set to produce “unintended consequences” in the wake of the coronavirus, Conservative lawmaker Mel Stride said Friday.
The cost of the policy is threatening to spiral thanks to the impact of the government’s furlough plan to support workers through the crisis — which could see wages drop this year, only to shoot up by almost 20% in 2021. A large increase in pensions, which already cost the government about 100 billion pounds ($126 billion) a year, could also trigger questions over intergenerational fairness at a time when young workers’ jobs are particularly at risk.
“A way forward might be to temporarily suspend the wages element of the lock,” Stride said. “This might not entirely conform to the Conservative Party manifesto — but I think most people would recognize that a potential double-digit percentage increase is unrealistic.”
Officials are aware that the pensions triple lock, promised by the last three Conservative prime ministers as a guarantee that retirement incomes will keep rising, may have to be reviewed, a person familiar with the matter said.
Even so, earlier this week, a government spokesman said the prime minister has “no plans” to abolish the triple lock.
Johnson’s Pledge to U.K. Pensioners Could Be At Risk After Virus
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