Could the broken promise of the pension triple lock be saved at the last minute?
Former government pensions minister Baroness Altmann is hoping so. Yesterday (2/11) she asked the Lords to vote against the legislation. Altmann says that MPs were “misled” in parliament when the government “spun” the effects of the cost of the triple lock, claiming that keeping wage inflation at 8% would cost £5 billion.
Altmann argues that actually the reality of breaking the triple lock would be to save the government £5 billion from the cut to pensions, which would add up to £30 billion over 5 years which she argues would directly affect over 12 million pensioners.
The House of Lords agreed.
They voted by a majority of almost 50 to send the legislation back to the House of Commons to re-instate the earnings-related element (the 8% increase). That means parliament will have to have a further debate on the matter. Which is a good thing since the first debate was over very quickly with very few MPs actually in attendance (for such a big policy change). Will anything change though?
It’s unlikely that the government will back down, but Baroness Altmann hopes that they will at least revise the increase from the proposed 2.5% to somewhere nearer the 8% figure.
She seems to have a strong argument. The principle is that the government has a contract with pensioners to pay their pensions (on which millions rely solely) and they shouldn’t alter that principle for political or budgetary purposes. i.e., because they claim to need to spend the money on something “more important” than pensions and pensioners. I have a lot of sympathy with the point. However, the government now has a substantial majority and is likely to vote down the changes.
Let’s see if there’s any compromise.
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As expected the government voted down the Lords proposed amendments today (15/11/21). Using its majority, the vote to retain the proposed suspension of the triple lock was voted through again by 300 votes to 229. Labour supported the Lord’s proposals, but the government is adamant that it can’t afford the 8% increase which it would have had to pay under the triple lock. The argument is that the 8% increase in wages is an artificial figure resulting from the pandemic. The government will instead pay a 3.1% increase in line with the Consumer Price Index. This is despite the fact that inflation is forecast to rise to 5%. Critics argue that the effect of the changes will simply mean that pensions fall behind again in real terms. The government says that it will restore the triple lock next year. Wait and see.
It’s clear that reliance on the State Pension for retirement income is unlikely to support a realistic standard of living in the future, if in fact it ever did?