Should we keep the triple lock? Your view on the state pension debate

No subject attracts as much attention as the state pension. Whether it’s the cost of providing it, the pros and cons of the Triple Lock Guarantee, or government interference, everyone has an opinion.

Seven days ago I wrote a piece about the sustainability of the triple lock against the backdrop of a likely increase in the state pension of more than 8 percent from the start of the new tax year in April next year.

More than 1,700 responses were received online. I also received a deluge of emails from readers eager to share their thoughts.

Everyone who responded: thank you very much. And those who wrote to me personally: special thanks. Feedback is what we want. Journalists don’t have all the answers (far from it).

As a result, today we’re dedicating a section of Money Mail and This is Money to what you have to say about the state pension’s triple lock, fairness or otherwise, and its future.

The triple lock: fair or too generous?

Few readers believe that the triple-lock warranty should be dropped. But many believe it needs to be refined.

Currently, it promises an annual increase in the state pension, based on the highest value: earnings growth (between May and July on an annual basis), inflation (in the year to September) or 2.5 percent.

With earnings growth outpacing inflation (8.2 percent versus 6.8 percent), this will be the wage component of the triple lock on which next year’s state pension increases will be based.

If earnings growth remains at 8.2 per cent when the figures are released next month, this will result in an annual increase in the maximum state pension of £869, bringing it to £11,469.

Those who retired before 2016 will receive less, with their full basic pension increased from £8,122 to £8,788 in the new tax year starting April 6.

Alan McFarland, a 67-year-old retired contract manager for the Yellow Pages, believes maintaining the value of the state pension is a “government obligation.”

Alan, who lives in Reading, Berkshire with his wife Kim, says: ‘Government must distinguish between essential and non-essential expenditure.

‘The state pension is essential and should therefore not be weakened in any way. But other expenditures, such as foreign aid to economies experiencing rapid economic growth, are a luxury this country can no longer afford.”

Another problem Alan has with the state pension is the tendency for governments to meddle with the rules – by constantly lowering the age at which people receive it, for example. Between 2026 and 2028, the state pension age will increase from 66 to 67 years.

“Changing the goalposts is wrong,” he says. ‘People need to be more certain about the state pension they can expect, so that they can plan accordingly.’

Jim Bell, a 75-year-old retired businessman from Lockerbie, in Dumfries and Galloway, believes keeping the triple lock in its current form is not feasible. Experts estimate that this will cost £10 billion in the coming tax year.

“The country simply cannot afford the triple lock,” says Jim. He believes a better method of calculating the increase would be to base it on the average of earnings growth, inflation and 2.5 percent.

So if earnings growth of 8.2 percent and inflation of 6.8 percent prove to be the relevant numbers in determining next year’s state pension, Jim’s method would result in a 5.8 percent increase instead of 8.2 percent.

Last year, ahead of the 10.1 percent increase in the state pension that took effect in April this year, Jim wrote to his local MP with his idea for a triple lock reform.

But he got no response from David Mundell, Conservative MP for Dumfriesshire, Clydesdale and Tweeddale.

“It’s a simple idea,” says Jim. “It would give retirees like me a fair pay rise without the government having to fund surprise increases, or incur the wrath of retirees by suspending the triple lock like last year.”

For the year beginning in April 2022, the increase in state pensions was limited to 3.1 percent (the increase in inflation) instead of earnings growth (9 percent), as public finances suffered heavily during the pandemic.

Several readers believe that any increase in state pensions should be subject to a ceiling – figures of 5 percent and 6 percent have been cited.

This would apply if the triple lock led to a higher percentage. “It’s common sense,” says pensioner Brian Agnew (name has been changed) of Eastbourne, East Sussex.

“The chancellor should determine the height of the ceiling every year, well before the triple lock is applied.”

Take into account the freezing of rights

Some readers believe that the state pension increases this year and next year should be put in context.

This is because the government’s decision to reduce the personal allowance (the amount you can earn before income tax takes effect) has resulted in many retirees paying more tax.

Among them is 86-year-old Jean Nevins, from Newcastle upon Tyne. Jean, who worked in management computer systems for a leading sports brand. She now pays more income tax on her state pension and small private pensions than ever before.

This is because a higher proportion of her income exceeds the personal allowance, which has been frozen at £12,570 since 2021 and will remain so until April 2028.

“It doesn’t really bother me,” says Jean, “but I do have to watch my spending.

“The government has given us a nice increase in state pensions this year and that’s on the agenda for next year, but I’m not crazy. What the government gives with one hand, it takes with the other.”

That’s a view shared by Don Hanley of South Woodham Ferrers in Essex.

Don, who has worked in the textile industry for most of his career, says the 10.1 percent increase in state pensions this year has prompted him to pay income taxes again as his income exceeds the personal allowance.

“I never thought I would have to pay income tax again at 75,” he says. “It doesn’t seem right or fair.”

State pension: to hold or to twist?

Lee Tucker, 67, cannot deal with those who believe the cost of maintaining the state pension (more than £120bn this tax year) is prohibitive. Some experts, such as the think tank The Adam Smith Institute, argue that there should be an income test.

“Too many experts view the state pension as simply a cost to the taxpayer,” says Lee, who is married and lives in Truro, Cornwall.

‘What they forget is that the £120bn is money that doesn’t just disappear. Most of it goes back into the economy in the form of spending, which in turn generates tax revenue – for example VAT on dining out, fuel excise on petrol and, of course, income tax (the state pension is taxable).

“Most of the people in the shops and cafes in Truro are retirees during the day. I doubt that all these large companies, which often employ young people, would survive without older people spending part of their state pension on them.’

Lee warns politicians: “Any government that tries to reduce the cost of the state pension by capping it will lead the country to financial disaster.”

It is a vision that appeals to many readers. Mess with our pensions at your peril.

What is your opinion on the state pension? Email Jeff.Prestridge@dailymail.co.uk