DOWNING Street has played down reports that the “triple lock” on pensions will be abolished as a result of the coronavirus financial crisis.
The triple lock, which has been in force since 2010, acts as a safeguard for state pensioners’ incomes and helps to protect their spending power.
The state pension increases every year based on whatever is highest - average earnings, 2.5%, or the rate of inflation.
However reports from Treasury sources emerged yesterday stating that Chancellor Rishi Sunak was considering suspending the scheme, which was a key part of the Conservatives manifesto pledge in the latest election.
Sources suggested the Chancellor may have to break the pledge on pensions as the cost of the coronavirus crisis, and subsequent job-saving schemes had been much higher than anticipated.
A Downing Street spokesman said yesterday:”Decisions on tax and pension policy are set out at Budget by the Chancellor” adding: “There are no plans to abolish the triple lock, and we will always stand by pensioners.”
Wjen asked if the triple lock might be suspended, rather than removed entirely, he said he would not”speculate on what inflation might be in future”.
A Labour spokesman said the party would not comment on speculation over Government plans, but said: We’ll have to wait to see what exactly the Government is talking about. but the priority must be maintaining pensions, particularly as we come out of the coronavirus crisis.”
He indicated the party would be likely to oppose the measures if they were brought forward by Mr Sunak, adding: “We have long said the triple lock is an important means of addressing the relatively low pension by international standards.”
According to analysis by consultant David Robbins, of Willis Towers Watson, pensioners could lose out on more than £1900 if the state pension was frozen,
The Treasury reportedly warned that keeping the pledge over the next two years could cost billions of pounds as wages are expected to rise after being artificially deflated by the government’s furlough scheme.
About 9m people are being paid through the scheme, which sees the government pay 80% of wages up to £2,500 a month.
It is due to be wound down gradually, with employers required to start paying contributions in August and by October they will have to pay 20% of the 80% of furloughed salaries,
By the end of October the scheme will stop altogether, however First Minister Nicola Sturgeon has repeatedly called for it to be extended to industries most in need.
Tory backbencher Steve Baker supported scrapping the pledge, saying: “We can’t afford it.
“We are looking at the public finances being in a genuinely catastrophic state ‘We are all going to have to make very hard choices.”
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