Suspension of the triple lock

From this mornings New Statesman email.

You can argue this one both ways: either you say, well, the future is unpredictable, and the point of the triple lock is to increase the state pension so it gets closer to the European average and eliminates pensioner poverty, a freakish year for increasing the triple lock may well be followed by a freakish year in the other direction, and it’s not really worth worrying about. Or you can say, look, when Steve Webb brought in the triple lock he did not envisage a lockdown and a pandemic: simply increase this year’s state pension based on a two-year average.

That latter argument is why the response to Sunak has been relatively muted among Conservative MPs and much of the press.

I'm not sure I understand why the "latter argument" mutes the Tory MPs?

One thing I do agree with in Stephen Bush's essay is that there is little in common between the pension and UC. He concludes:

In many ways, the central question of British politics for the next few years will be whether or not those very painful cuts happen: what happens to British society if they do, what happens to the Johnson-Sunak relationship if they are implemented, what happens if to the Johnson-Sunak relationship if they aren’t, and whether the Tory party’s political difficulties in delivering its planned cuts from 2015 onwards have been eradicated thanks to a new justification in the shape of the pandemic.

So just those small things to worry about then [ironic smile]

Absolutely agree Doodledog you have summed up exactly my take on this too.

Doodledog I think "insinuates is a bit derogatory. I just think there are a number of different angles to this and I knew you'd be able to explain one of them better than I could. FWIW I think your post was well argued and I mainly agree with the first part of it.

My interest in the comparison between the state pension and UC is because it's affected me personally.

I turned 66 in April. For a year before that, I'd lost most my business as a result of Covid. I wasn't eligible for SSEIS, so have lived on a fraction of a shoestring plus savings. To say it's been tough financially would be an understatement.

I was eligible for a small amount of means-tested Universal Credit, but only as a result of the £20 upgrade, but the moment I turned 66, my income increased by (for me) a substantial amount. It nearly doubled. Therefore, I'm acutely aware of the difference between UC and state pension.

My bills haven't increased. I have 47 years of NI contributions, so I think I'd paid for my UC too. Some of those years I was even a higher rate taxpayer, so I don't feel guilty at all about claiming. I don't accept it's a false equivalence. In both cases, the state is supporting people who for whatever reason can't work.

BTW I received £80 a month in UC, which actually made a huge difference to me. £2600 a month would have been like winning the lottery. The £670 every four weeks I receive in state pension is a fortune.

growstuff

I suspect it's an attempt to mitigate removing the £20 uprating to Universal Credit, from which about five million families have benefitted. Many of those families are in "red wall" constituencies and the Tories want to keep their votes.

It will be interesting to see how many of the they just need to learn to budget/if you can't feed your children, don't have them/My Mother raised 18 of us on 2/6 a week brigade who will be happy to see the £20 a week reduction in UC, will be as happy when their own pensions are hit. Maybe they should not have retired if they couldn't afford it/have saved in a private pension? I am not happy about the possible waive of the Triple Lock, but it is just another manifesto promise which has been broken, why is anyone surprised?

This is something we have worked and paid into, I agree, and so are the family tax credits, and Universal Credit that working families are receiving. They too have paid in.

GillT57

^This is something we have worked and paid into^, I agree, and so are the family tax credits, and Universal Credit that working families are receiving. They too have paid in.

Agreed.

growstuff I don't think that our points of view on this are very far apart, really. The main difference, I think, is that you always want bring UC and other benefits into any discussion of pensions, which I admit I find exasperating, for the reasons I have outlined. You are doing it in your post above, when you talk about your own situation (with which I have every sympathy).

Stopping the triple lock or means testing pensions is not the answer to the fact that UC payments are too low. They are different things. Claiming they are the same derails the discussion, and 'whataboutery' plays into the hands of those who want to dismantle the welfare state altogether.

Also, Gill57, good points about the 'they just need to learn to budget' brigade.

When working I always had to pay the highest rate of NI - fair enough and I elected to continue paying the full NI contributions when I married as my husband understood the consequences of not doing so - but I knew plenty of women who thought I was mad because the married women’s NI was much lower.
I did have the benefit of not paying tax on my Teaching pension but I pay tax on the pension now being paid to me. With an increased pension payment for everyone it would be perfectly fair as those with extra income from other sources would be paying tax on it.
When I was working a third of my salary was taken in NI payments, income tax and superannuation payments. To need to pay tax now I am receiving the benefits of those payments is fine - I am lucky to not be living on the basic pension but I think that everyone should be given a living pension even if some of us get some clawed back through the tax system.
In a civilised country no one should be forced to apply for every extra penny they need. There will always be some scrounges but most people are not like that and deserve a living pension - the same as people who have worked for many years need a living credit payment if they find themselves out of work for any reason. This country needs to behave in a humane manner to all its citizens whatever their age or circumstances.

Galaxy

That's not a lie about Owen Jones , it's a completely accurate description.

OJ has changed a lot over the last year or so. He now comes over as being quite a gentle soul.

I read the Guardian article and to me it makes sense. There are many people who have only the state pension and many more who have tiny private pensions. There are two alternatives - (1) the people who only receive the state pension should be able to claim more than at present n other benefits such as housing and rate relief, and (2) increase higher rate taxes and/or reduce the threshold at which higher rate start.

I have a occupational pension and I have paid 39 years of NI contributions now. I will not get my full state pension due to my occupational pension. I have done the online pension forcast.
I would also add that after a certain amount of my occ pen and state pension I will pay tax.
I am honest about this, I dont want to just manage I want to enjoy my retirement and not have money worries, I am 64 now and have under two years before I finish work.
Both my pensions have been paid by my NI contribution and what I paid for my works pension, and although I hate the word, I feel fully entitled to them, I also dont agree with taking the triple lock away.
I dont begrudge anybody their UC payments and yes they should get a decent rate.

I am honest about this, I dont want to just manage I want to enjoy my retirement and not have money worries, I am 64 now and have under two years before I finish work.

I completely agree. I don't understand why so many people seem to begrudge a decent standard of living to older people. As soon as they hear that pensioners get anything they start complaining 'Oh, but he can afford to pay for that', or 'why should she get it free? She can afford to put sugar in her coffee, for goodness' sake! Means test it!'

It's as though older people are not entitled to do more than 'just manage', even if they have worked and saved. To say that is not to deny that others work and save, either. Of course they do. It's just that pensioners have been doing it for longer, and therefore some of them will have a nest egg that younger people are still saving towards.

Younger people might save for a holiday, or towards their children's education, or for a bigger house, or whatever it happens to be. That's great, and if they then spend the money there will be more in next month's salary. Older people can't rely on there being more money coming in, so all they have is what they have saved and whatever pension they have accumulated. If they are only allowed to have a certain amount of savings before means-testing kicks in for care, or for free prescriptions, or a bus pass or whatever; or if their state pension is reduced in line with their occupational one because 'they can afford it', they have no safety net at all.

I would love someone to explain to me where the justice is in that.

For what it's worth, I have 4 years before I can claim my state pension, and am still paying NI towards it. I have a small occupational pension and a modest savings pot, which are tiding me over until then. I am not wealthy, and I'm not sitting on a huge profit in my house. I have not inherited any money, and have worked since I was 16.

I'm not complaining, but neither am I arguing from a position of huge privilege. I am not remotely unsympathetic towards people who are worse off than I am, and I don't begrudge them anything; but neither do I think that making me worse off than I am will help them in any way.

I am lucky enough to have enough income to be comfortable and to be fair pensioners are the biggest group who didn't suffer financially under lockdown, so I could manage but as others have pointed out many pensioners have only their state pension. I think pension credit should be awarded automatically you shouldn't have to apply for it though.

According to a report from the Organisation for Economic Co-operation and Development (OECD) pensioners in the United Kingdom receive around a third (29%) of a working wage when they retire, compared to the OECD average of 63%.

Let that sink in…50% of working wage is given to pensioners in France, USA and Germany. Uk pensioners get under 30% which is appalling and why the triple lock is in place to gradually make uk pensions more equable to other countries.
Because of a fluke of the pandemic that would mean pensioners might get an £8 pay rise next year instead of the usual £2.50. So much ignorance on this most people don’t have public sector or orivate pensions but they don’t make a fuss cos they often don’t have smartphones.
People seem to think pensioners are selfish baby boomers. That is so unfair. They confuse rich pensioners on public sector and private pensions with the majority just on the state pension of £170 per week. The former won’t notice it and pay tax, the latter need a rise badly. Our pensioner poverty rate is shameful.
What do you think ? I’m fed up with the trope of ‘greedy pensioners’ and the triple lock as if it’s generous! It’s usually not enough to buy a coffee in Starbucks. Fuelled by ignorance.

There is no pot of money with each persons name on regardless of what NI or Tax they have or are paying. Its been used to pay for our parents and grandparents pensions of which there would have been insufficient funds that they had paid into in the first place. I don't like the Guardian much as they are very biased and a lot of stuff is exaggerated, however in that particular article he was right. If the triple lock is removed permanently the younger generation will suffer more. I do think that maybe it could and should be reduced on this occasion only to help the ongoing costs for the Covid-19 pandemic. I also think that people eligible for the Pension Credit should not have to do so much work and form filling in order to receive it. 80% of the information the government want is accessible to them anyway.

I think it is good to remember that pension is, in effect, deferred salary. Everyone who works pays into the system and is therefore entitled to the proceeds. Whether it is state or private pension. Wages have gone up, there are jobs if people want them, and triple lock means pensioner pay increases at the same rate as non-pensioners.

You do realize that canny MPs will be following this thread?
Talk about shooting yourself in the foot! They would , quite rightly, if they followed through what I have read this morning, assume that o.k. some people will moan about the triple lock but they will actually just roll over and play dead when it comes to doing anything about it. I am incandescent with rage. Yes the lowest pension in Europe, particularly for women. Those of us who have had unpaid caring responsibilities have had no chance to provide sufficiently for our old age. Savings have shown no interest to speak of for years. We work on towards our eighties and beyond. So please those who are fortunate enough not to be affected by the triple lock one way or the other, stop and think. It could be you who has to choose whether to heat or eat in winters to come.

The point people seem to miss is that 8% is calculated on a very low base so the most a pensioner on the new higher rate would get £572.41 many more are on the older rate so will not get as much.
Someone earning £25,000 getting a 2% rise will gain £500 and £30,000 is +£600. So although the pensioner 8% sounds very generous it doesn’t equate to a bumper payrise in any sense of the words. Given that everything goes up by more than the % we have every year, we are still sliding into poverty.

Horrified, so they want to remove free bus passes and free prescriptions for those under pension age, and now breaking promises on the pensions, how quickly they have forgotten why the triple lock was introduced. So they cheated us women of six years of the pension we were promised, so many of us having to drop down to min wage type employment as arthritis, and other problems (including attitude and ageism) take hold. The people on min wage and needing prescription because of ill health now get told by the time you retire you might be struggling financially the rest of your life

MPs get very generous pensions. How can they possibly imagine what life is like for those who don't.

The successive prime ministers who decided not to top up the pensions fund are a disgrace to a country which struggled for so long with arguments for and against supporting all citizens to the achievement of a decent standard of living. We finally achieved a working welfare state only to have had it slowly eroded over years by the selfishness of politicians.

The state pension in the UK is a joke. Even countries regarded as not being as afluent award more. If a person is obliged to pay into a scheme then surely they have the right to expect the terms of that scheme to be
honoured ie an income to support a person to live. With the recent change in award levels some pensioners have to rely on claiming benefits. Why is the state pension not at a level of that plus any benefits if a "top up" is considered essential to be able to live. I have a small occupational pension after 34 years of work. This with state pension takes me over the personal allowance therefore I still pay tax. The triple lock should stay, it's only due to the high amount of 8% being mentioned that has caused such a backlash. When its 2% never much comment.

I hope this is allowed, I do not normally comment on forums, but this is something that greatly affect me and those I care about.

IMO the Triple Lock was designed to stop pensioners falling into abject poverty. Since April 2016, the sum received in SP payments is now based on NI contributions whilst in work, and contrary to popular belief, not everyone, mostly women, do not receive the full amount of what is already the lowest SP in the developed World, and many pensioners especially lone women and widowed, (of which I’m one), only have the State Pension to rely on. Millions of £s have been saved already on escalating the SPA for 1950’s women, millions have had to wait a full extra 6 years, (me included), before being able to qualify, and the optional lump sum that could be taken if extra years were worked has been abolished together with any right to a late Husbands contributions. Widows like me are left high and dry. Enough money has been made of the backs of older people, many of whom are still working through necessity and paying tax. The pandemic and resulting furlough scheme have artificially distorted earnings, these are highly unusual circumstances, and whilst I agree that the 8% uplift in SP would be too high in these circumstances, I do not agree with suspending the Triple Lock as that would lead to complete absolution, rather set it at a lower rate. I am intrigued as to where the 8% figure has come from in the first place, and which employer can offer an 8% increase in salaries and wages anyway especially in this climate? These tactics are designed to divide and conquer, pit young against old, rich against poor. We are all people who need to live and pay our way, and that is becoming increasingly difficult on a pittance. This situation is not the fault of young or old, rather the powers that be who could change this whole situation in a heartbeat.

The housing market is a separate issue which started with the council house sales in the 1970s and the resultant ‘buy to let’ culture.

There is no pot of money with each persons name on regardless of what NI or Tax they have or are paying. Its been used to pay for our parents and grandparents pensions ...

MaggsMcG - this needs saying more often!

What nobody realises is that pensioners spend money in the local economy! Therefore they give more than they receive! If you up there pension rate then more can be spent within the local and wider environment! I suspect this government wants us all to due off very quickly ! Those with assets do not spend in their communities ! Those on the minimum/living wage /pensions do!! Who is the better person ???