The pensions "triple lock" has served its purpose, now give pensioners a little less

The triple lock on state pensions should be retired, says Merryn Somerset Webb, and pensioners' benefits means tested.


Pensioners' benefits, such as bus passes and winter fuel payments, should be means-tested
(Image credit: 2007 Getty Images)

Poor George Osborne. He's barely been gone for three months not even long enough to really get his speaking career going and his legacy is already being trashed. First up looks to be his "triple lock" for the state pension.

Since 2012 the basic pension in the UK has been increased every year by the greater of one of three things the inflation rate, the growth in average earnings, or 2.5%. The first two make some sense. Back in the 1980s our pensioners were much more likely to be living in a degree of poverty than the population as a whole: their post housing income came in at around 65% that of a working household. Today they're doing just fine: according to the Institute for Financial Studies, the retired nowhaveslightly higher average incomes than the working. The triple lock has served its purpose.

We don't want to go back to the bad old days the basic state pension is still only just over £119 a week and no one wants to see it fall in real terms. So let's make sure the state pension at the very least rises with inflation or wages a "double lock", if you like. But the 2.5% bit is a nonsense a vote grabbing number plucked from the air at a time when Osborne presumably assumed that inflation and wages would forever rise at more than 2.5% a year. It hasn't worked out like that.

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Thanks to the 2.5% promise, the triple lock has cost taxpayers going on £20bn more than if pension payments had simply risen in line with average earnings. That's too much. Let's not forget that the UK deficit is huger than ever: this year we are looking at a shortfall of over £70bn or £17bn more than George Osborne had predicted. So much for austerity something has to give.

There isn't much agreement on much these days. But on benefits for pensioners there is. Many people agree that bus passes, fuel allowances and the like should be means tested (I'm not including the basic pension here that would encourage people not to save for their old age).

And most people are also coming round to the idea that random increases in benefits to one group of people only doesn't have much of an "all in it together" look to it. It's time as a report just out from the work and pensions committee suggests for the triple lock to go.

What it isn't time for, however, is for any savings to be recycled to the "millennials" something intergenerational inequality zealots are now calling for. Instead, how about we just keep any savings as actual savings and hope we can find enough more of them to make a start on filling our £70bn gap?

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.