The DWP could introduce a new test for pensioners.
Pensioners could be hit with a wealth test (Image: Getty)
The Department for Work and Pensions (DWP) could impose a “wealth test” on millions of Brits to determine their State Pension entitlement if the Triple Lock is scrapped. Personal finance experts have shared suggestions with MPs on the Work and Pensions Committee over what the State Pension will look like going forward amid concerns over its long-term sustainability.
They have recommended introducing means-testing for State Pensions, having a wealth test for payments or changing the model entirely.
Jonathan Cribb, the deputy director at the Institute for Fiscal Studies (IFS), said: “This creates uncertainty around State Pension increases. 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 it’s been so impactful over the last 15 years is entirely a function of how volatile macroeconomic growth and inflation have been.”
Experts have recommended means-testing for the state pension (Image: Getty)
Mr Cribb added: “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.”
Chris Curry, director of the Pensions Policy Institute, presented the idea of a “wealth test” as an alternative to the triple lock before the committee’s policymakers.
“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,” Mr Curry said.
“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 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.
“One of the big challenges 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.”
He added: “Anything which moves away from the fact that people should get at least some minimum amount is going to be difficult.”
