Express reporter Adam Toms argues that the Chancellor needs to look at the triple lock, which he says is not suited to today’s socioeconomic environment.
The Chancellor needs to look at the triple lock, Express reporter Adam Toms says (Image: Getty)
I turned 28-years-old on Thursday, and so you are entitled to ask why the financial affairs of pensioners should concern me. I would answer that a country’s policies concerning its elderly say an awful lot about the way it views its citizens, as well as how a nation views its future as a whole. The pension triple lock was rolled out in 2011 by then Tory Chancellor George Osborne (doesn’t his time at the despatch box feel like hundreds of years ago now?), and means the Government is obliged to increase the state pension every April by whichever is highest out of average earnings growth and inflation, according to the consumer price index (CPI), or 2.5%.
An obvious vote-winner with those in their more advanced years, Rishi Sunak even proposed a “triple lock plus”, which would have seen an increase to the tax-free pension allowance of at least 2.5% a year, as he went about a desperate and ultimately hopeless attempt to win the 2024 General Election. It did not make a difference, and the last Conservative prime minister for a very long time, it seems, slumped to a humiliating defeat.
Rather a lot of pensioners in the UK are sitting pretty, financially speaking (Image: Getty)
The new government came under heavy fire after it announced in July of that year that it planned to reform the winter fuel allowance so that taxpayers’ money would not be landing in the bank accounts of wealthier pensioners, who most likely did not need it.
A huge backlash ensued, and Rachel Reeves was forced to row back. This has proven to be a habit of hers.
Although unpopular, the logic behind the policy was on the right lines.
Older Brits sitting on extremely valuable assets, such as their homes, and huge pots of savings, were receiving extra cash that could have been put towards helping to rectify the UK’s famously long list of problems.
The triple lock can be viewed along similar lines, in that some senior citizens would get by perfectly well without it.
I propose keeping the state pension universal and predictable, but without the exhaustive guarantees laid out by Osborne.
Instead, why not introduce a supplementary uplift for those on lower incomes and therefore in need of one?
It would work in a similar way to the winter fuel payment now, after Ms Reeves finally decided what to do with it, in that it would be means-tested.
An even neater solution could be to dispense with the fuel benefit altogether and establish a single payment to help out less well-off pensioners.
This targeted solution would save the Exchequer money at a time when it is looking to plug a huge hole in the public finances, and be, I would argue, more equitable.
I am currently renting in London, and have a decent amount of money saved.
However, this was mostly set aside some years ago, when I worked two jobs and lived in my parents’ house, paying a small amount of board per month.
Youngsters are being forced to rent, especially in expensive cities like London (Image: Getty)
I have called the capital home for more than two years now, and I’m at the moment earning a slither above a Brits’ median gross annual earnings, the figure as of April this year.
I am also putting some income aside in a pension pot.
The amount of money I’ve otherwise managed to save while living here is measly.
At the moment, I would fall just short of being able to afford a 10% deposit on a house with the average price tag of £273,000.
Looking back with open-mouthed amazement at what properties used to cost is a well-rehearsed exercise. But it’s worth doing here one more time.
According to SunLife, at the start of the 1970s, the average house price was £4,378.
The figure shot up to £23,730 at the start of 1981.
The average cost of a home was £59,587 at the beginning of the 1990s.
Quite simply, us youngsters are trying to buy a property in a different economic universe.
Before the COVID-19 pandemic, the Institute for Fiscal Studies (IFS) wrote in 2019: “The key reason for lower wealth for this generation is lower property wealth, as the direct result of lower rates of homeownership.
Harold Macmillan famously said Brits had ‘never had it so good’ in the 1950s (Image: Getty)
“At age 30, only 40% of those born in the early 80s were homeowners, compared to 55% of those born in the 1970s and 60% of those born in the 1960s at the same age.”
In 2022, the Office for National Statistics (ONS) wrote that median household wealth was 33 times higher among households with a head aged 65 to 74 years, compared with households in which the head was aged 16 to 24 years.
It added that median household wealth gradually increased with age, from £15,200 for households with a head aged 16 to 24 years, to a peak of £502,500 for households with a head aged 65 to 74 years.
Earlier this year, the Intergenerational Foundation mentioned in a report titled “A Growing Divide: Two decades of intergenerational unfairness” that the median individual wealth gap between the 16–24 and 65–74 age groups has grown by approximately 40%, increasing from £230,400 in 2010–12 to £323,000 in 2018–20.
Property ownership and the job market are, of course, deeply interconnected issues.
In 2018, the TUC reported that young workers are:
- Disproportionately affected by wage stagnation
- Concentrated in low-paying jobs
- Lacking access to skills development to get on in work
- Especially vulnerable to insecure work
The Intergenerational Foundation emphasised similar issues, as well as the escalating issue of student debt.
Wealth cannot be accrued as easily by people my age.
Obviously, our elders had to contend with their own issues.
But it is generally accepted that, following the horrendous events of the World War 2, Brits, as Harold Macmillan said in 1957, “never had it so good”.
The same cannot be said today, and the Government’s pension Bill is only set to expand.
The number of people aged 65 and over in England is projected to increase by 3.3million in the next 20 years and by 6.5million in the next 40 years, according to the Centre for Ageing Better.
In July, the Government revived a landmark Pensions Commission to confront a “retirement crisis” that “risks tomorrow’s pensioners being poorer than today’s”.
Us young’uns need to be considered also.
