At a meeting of the Work and Pensions Committee, retirement experts spoke about what could eventually replace the triple lock. Ideas that were put forward included that the state pension could become means-tested or a wealth test could be applied, or that policy makers could look at other countries’ models for increasing their pensioner benefits.

Inflation protection

Jonathan Cribb, deputy director of the Institute for Fiscal Studies, warned that the current system means it’s hard to predict how much the state pension will go up. He said: “I’m a critic of the triple lock not because it generates a higher state pension but because you have no idea what level of state pension it’s going to be.

“The fact that’s it been so impactful over the last 15 years is entirely a function of how volatile macroeconomic growth and inflation have been.” However, he said that it’s important that payments do go up by a certain amount to protect pensioners from the rising cost of living.

He said: “I think it’s important to provide pensioners with inflation protection from year to year because they don’t have some of the other ways of responding to falls in income that younger groups do.”

Reduced payments

Also appearing before the committee was Chris Curry, director of the Pensions Policy Institute. He spoke about the possibility of targeted support so some claimants get more than others.

He said: “You could target additional support to particular groups although as we’ve found in the past with means testing, that can be difficult if it requires claiming. You don’t always reach the people who you want to reach because there tends to be a gap between the people who need it and the people who receive it.”

The expert also put forward the idea of a means-tested system: “The other way is to reduce the amount that goes to others, through either a means test or a wealth test. I think both of those have their challenges. There is always a trade off between complexity and simplicity.”

He warned that such changes may grate with people’s idea they have paid into their state pension all their life. You typically need 35 years of National Insurance contributions to get the full new state pension. Mr Curry said: “One of the big challenge in all of this is people’s perception of fairness.

“When it comes to the state pension, people have a very specific idea of this is a benefit we have contributed to through National Insurance all our working lives. Anything which moves away from the fact that people should get at least some minimum amount is going to be difficult.”

Looking further abroad

Mr Cribb suggested the UK could look to another anglophone country’s model for deciding the state pension increases. He said: “The Australian system is basically what I think we should have in terms of indexation, where in the long run the state pension would rise in line with average earnings.

“You protect temporarily individuals against inflation being very high by indexing in line with inflation, and what the Australians do is they keep that inflation indexation for longer so that in the long run, you still go up in line with earnings growth.

“It’s a little bit complicated to describe, but that’s essentially the idea. Protection against inflation in the short run, making sure that it keeps up with earnings growth in the long run.”