The triple lock will stay along with winter fuel payments as a result of the Conservative party’s deal with the Democratic Unionist Party (DUP), it has been confirmed.
A confidence and supply agreement published Monday morning said: “Both parties have agreed that there will be no change to the pensions triple lock and the universal nature of the winter fuel payment.”
The decision on keeping the triple lock forms a U-turn by the Conservative party, which campaigned to scrap the triple lock by the end of 2020 and begin to means test winter fuel payments in this year’s general election. However a surprise hung parliament forced the Conservatives to seek backing from the Northern Irish party after they failed to win an overall majority in the June election.
According to the agreement, the two parties are not forming a formal coalition. Instead, the agreement will see the DUP back the Conservative government on measures announced in the Queen’s speech, the budget, finance bills and money bills. Support on other matters will be agreed on a case by case basis.
‘Political necessity trumped long-term thinking’
AJ Bell senior analyst Tom Selby said: “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.”
He described the policy as “a random mechanism for ratcheting up the value of the state pension”, but said moving to a double-lock of earnings or inflation was unlikely to cost a lot less in the short-term.
He said: “The state pension system will come crashing down unless spending is reigned in, with estimates suggesting it will cost £30bn more in today’s terms in 50 years’ time unless reforms are introduced.
“This will involve either reducing the amount people receive, or increasing the state pension age. Neither of these reforms will be popular but if politicians refuse to address this reality they will risk further piling the burden on future generations.”
Aegon Pensions Director Steven Cameron added: “In practice, if as many expect inflation remains above 2.5% 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, particularly if inflation returns to below 2.5%. With increased focus on intergenerational fairness, constantly prioritising retirees over those of working age could become increasingly politically difficult.”
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