ALEX BRUMMER: Don’t betray Britain’s retirees by cracking the triple lock

The idea that Tory grandee William Hague, with a fat parliamentary pension, should be pronouncing on the need to unpick the ‘triple lock’ on state pensions is presumptuous. 

Admittedly, the ‘triple lock’ largely is a political device devised by former chancellor George Osborne in 2010 with the aim of keeping older voters on board.

It pledges that the state pension will rise each year in line with prices, average earnings or 2.5 per cent – whichever is greater. 

There were muted complaints about its meagreness when inflation hovered at or around the Bank of England’s 2 per cent target rate.

It is only with the arrival of the pandemic and Putin’s war on Ukraine, ushering in double digit inflation, that politicians decided the current settlement is unsustainable.

Safety net: The ‘triple lock’ pledges that the state pension will rise each year in line with prices, average earnings or 2.5% – whichever is greater

The present scheme is random and lacks economic rigour.

Switching between different data sets to determine annual increases potentially could produce bizarre outcomes. It is also a nightmare for forecasters, making longer term projections for the public finances.

The fundamental question the Government should address is whether state pensions are deferred wages and should always be linked to average earnings? 

Or are they a benefit like any other and should be automatically be rerated by the consumer prices index?

As matters stand, average earnings, now confirmed at close to 8 per cent, will be the metric for an increase this year.

Most of the nation’s workforce regard the state pension as an entitlement, having paid national insurance contributions (NICS) for most of their lives.

The link is an artifice. There is no concept of ring-fenced funds as far as HM Treasury is concerned.

The way the UK manages its retirement arrangements is very different to the US where the equivalent, Social Security, is fully funded. What is scaring the government classes, lumbered with big fiscal choices, is the chatter.

In its recent report, Tax And Public Finances, the Institute for Fiscal Studies notes that at present, 23 per cent of UK adults are above pension age.

The figure is expected to rise to 27 per cent by 2040 and 30 per cent by 2070. An ageing population could be consuming up to 45 per cent of national income by the 2040s, posing a huge fiscal challenge.

It might not seem so frightening were the public finances in better shape. The debt-to-GDP ratio has run up to nearly 100 per cent on the back of shocks dating back to the financial crisis.

A weird inter-generational debate has also developed, partly fuelled by the Resolution Foundation think-tank. 

It has managed to convince sections of the population that younger people today are hard done by compared to baby boomers, and there needs to be some redress from old to young.

Former Tory pensions minister Ros Altmann is dismissive of a political debate which says that an increase of 8 per cent in the state pension is unaffordable.

An 8 per cent rise in the basic pension would increase pay outs to £168.70-a-week or £8770 a year.

Living on that, with no other income, is a stretch. The UK state pension is mean in the extreme, and way below the £507-a-week in Germany and £513 in Spain. 

Final insult for better-off pensioners, in workplace funds, is that a chunk of the state pension is subjected to income taxes. So much for the free ride for silver surfers.

Regularising the universal pension increase is a good idea.

The earnings link is most rational, as has been seen in 2023. It tends to follow the cost of living with a time lag.

Efforts to cap increases would betray the post-war cradle to grave social contract.

Store fever

The decision by Associated British Food boss George Weston to weigh into the public debate about shoplifting and staff abuse in stores was not taken lightly.

The Westons tends to prefer a low profile. He fears the wave of hooliganism in his Primark stores has reached unacceptable levels where it impinges on performance and safety. 

It may even have become a source of income for organised crime. Yet police and courts seem indifferent.

If there is any comfort to be drawn from any of this, it is that Britain is not alone.

Primark sees similar bad behaviours in France, Spain and the US.

In American shopping venues, competitors have taken to locking up socks in cabinets. 

Such measures may become necessary in the UK after last month’s social media induced Oxford Street looting spree.

This post first appeared on Dailymail.co.uk