Scrap state pension triple-lock guarantee, say MPs

An influential cross-party committee of MPs has recommended scrapping guaranteed rises in the state pension.

Following an inquiry into intergenerational fairness, the Commons work and pensions committee says the "triple-lock" guarantee should be axed as the current system is "unsustainable".

Under the scheme, which was introduced in 2010, the state pension rises each year by 2.5 per cent, consumer price inflation or average earnings growth, whichever is highest.

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As a result, it has been rising at 2.5 per cent a year for the past two years, despite the stagnant cost of living and benefits for most working-age Britons being frozen.

The MPs said the economy has become "heavily skewed" towards well-off baby boomers, saying: "The millennial generation, born between 1981 and 2000, faces being the first in modern times to be financially worse off than its predecessors."

According to the Daily Telegraph, there are "growing fears over intergenerational fairness as pensioners have been sheltered from the impact of austerity cuts while working age poverty increases".

The politicians also called for a review of other universal pensioner benefits, including the winter fuel allowance and free TV licences for over 75s. Such payments should not be considered "sacrosanct", they said.

Tory MPs including Iain Duncan Smith, the former work and pensions secretary, have called on the government to drop the triple-lock pledge. However, ministers have rejected the suggestion.

"You only have to look at the turnout in general elections to understand why," says Tom McPhail from Hargreaves Lansdown.

"With 78 per cent of the over-65s voting, compared to just 43 per cent of the eligible under-25s, politicians are chronically compromised when making any policy decisions which might be detrimental to older citizens."

A report published by the Government Actuary's Department last year estimated the triple-lock guarantee had added around £6bn a year to the cost of the state pension.