The Conservatives previously pledged to keep the triple lock in place for this term in parliament. That commitment will end in June and voters will want to know what position they’re taking on the state pension, the single biggest welfare cost. Theresa May avoided questions on the triple lock, leading Labour leader Jeremy Corbyn to accuse her of dodging the question.
Old Mutual Wealth surveyed 1,000 voters aged 55 and over and asked if the threat to the state pension triple lock would change their voting habits. 34.2% said they were less likely to vote conservative if the triple lock was at risk.
Labour has pledged to keep the triple lock on state pension payment increases in place till 2025. However, the Cridland report on the state pension age recently recommended scrapping the triple lock by the next parliament to strike a balance between access to the state pension and its value. The government was due to respond to the report next month.
The over 55s are a key contingent in the general election as they exercise their vote more frequently than younger counterparts. In the last general election in 2015 those aged 55-64 had a 77% turnout and those 65+ had a 78% turnout, according to statistics from Ipsos MORI. This compares to those aged 18-24, with a 43% turnout.
Old Mutual Wealth pensions expert, Jon Greer comments:
“The issue of the triple lock has now become not just a key long-term decision but a crucial election battleground, with all parties under pressure to set out when they think we should be able to retire and how they plan to create an economy that supports longer working lives.
“The state pension is one of the biggest costs to the public purse and the OBR projects it will cost 6.2% of GDP in 2036/7, up from 5.2% today, even though the state pension age is due to increase to 68 by then. In his report Cridland noted if the same rise in spending was faced today, this would be equivalent to a rise in taxation of £725 per household per year. On top of this, overall age-related spending is predicted to rise to more than a quarter of GDP by the middle of this century.
“The issue is that regardless of what happens to people’s earnings or the state economy the state pension has the potential to ratchet up by at least 2.5%. Replacing the triple lock with an earnings link would make sure growth in pensions continues, but without the ratchet effect. In times when earnings fall behind price inflation, an above earnings increase could kick in until real earnings growth resumes.
“As society ages, with more people reaching retirement age leaning on a smaller proportion of the population that are of working age, costs will become a significant burden. While any party that refuses to address the political hot-potato of the state pension could be accused of kicking the can down the road. However, the power of the grey vote may mean politics rules over reason.
“With the pension system positioned as a key battleground for the upcoming election, the only way to be certain of your ability to retire is to take the decision out of the hands of the politicians and ensure your own saving provisions are adequate. Alongside the state pension debate, there will be plenty of voters that want to know what policymakers have in mind for private pensions, and many will hope to see a commitment not to curb long-term saving incentives.”
*The triple lock increases state pension payments annually by either inflation, average earnings growth or 2.5 per cent, whichever is highest.