Young people want to scrap pensions triple lock

Scrap the triple lock

Young people want to see the state pension triple lock axed. It's easy to see why, as they will shoulder much of the burden for paying for it, but they could be making a huge mistake.

See also: The one move that will boost your pension income by two thirds

See also: Worldwide pensions crisis: what it means for you

The triple lock guarantees to increase the state pension either in line with wages, with prices, or by 2.5% a year - whichever is higher. It has been responsible for pushing the value of the basic state pension up to its highest share of average earnings since April 1988.

Research from Aegon found that there was most support for the triple lock among people in retirement or just reaching retirement age. Almost three quarters of those aged 70 and over support the triple lock, while 68% of those in their 60s support it, and 49% of those in their 50s.

The younger people are, however, the less support they showed for the idea. Of those aged 18-30, only 38% of people support the triple lock - and 43% of them would like to see pensions linked to price inflation instead.


On the one hand, it's easy to understand. Younger people will spend the greater part of their working lives paying taxes in order to pay for these higher state pensions. At the same time, they are being told that their state pension age will rise into their 70s and beyond, and there's a growing sense of doubt that state pensions will exist at all by the time they come to retire.

They are also living through a time of stagnant wage increases, so it's difficult to argue that they should pay for other people to have a rising income out of their taxes.

However, on the flip side, those who are a bit longer in the tooth, have experience of the difficulty of linking pension income to a single measure. Back when it was linked to price increases, it was vastly outpaced by wage rises, so pensioners became comparatively poorer every year. If it was linked to wage increases, meanwhile, there's a risk that at times of rising prices and falling wages those relying on the basic state pension - and living on a low income - would not be able to make ends meet.

Better off

It's also worth noting that those who stand to gain the most from the triple lock are the younger generation - assuming that there is a state pension in a few decades time.

In the seven years since the lock was introduced by the coalition government, the pension has risen £107 more a year than it would have done under a double lock. Given that some of those surveyed have 50 years to retirement, it's easy to see how much income they could miss out on in retirement if the state pension was moved to a double-lock - or even a single one.

Given that when these younger people come to retire, they won't have the benefit of generous final salary pensions, the extra income from a state pension will be even more essential.

Steven Cameron, Pensions Director at Aegon said: "In some sense, offering less generous increases to the state pension would benefit younger age groups. State pensions are not funded in advance, so it's the income tax and National Insurance contributions of today's working population that are funding the payments those in retirement receive. However, in the long run younger workers could miss out from a pension that is constantly uprated by a minimum of 2.5% before and after they retire. These findings highlight the intergenerational impacts that policy changes can have not just now but also in the future as people's priorities change over time."

How we spend our pensions
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How we spend our pensions

Figures from Saga show that the over 50s now account for the majority of money spent by Brits on travel and tourism. They have the time to spare, the money, and they are healthy enough to take on the world.

A poll from Abta found that in the wake of pension freedoms, 35% of people were considering cashing in at least part of their pension to travel. A separate study by Senior Railcard found that pensioners take an average of three holidays a year, plus two weekends away, and 17 day trips.

Research from Senior Railcard found that retirees eat out an average of three times a month. However, one in ten do so more than twice a week, and one in three people said that one of the first things they did when they retired was to go out for lunch with their friends.

Of course, just because retirees want to enjoy themselves, it doesn't mean they are happy to throw money away. The vast majority are keen to eat at lunchtimes, when a fixed lunch menu tends to be cheaper, and canny retirees are skilled at tracking down pensioner special offers too.

Figures from the Office for National Statistics show that on average nearly a fifth of the money spent by people aged 65-74 is on leisure. This includes everything from the cinema and theatre to golfing and gardening. They spent more on this than on food, energy bills and transport.

A report by Canada Life found that retirees are spending £4,279 a year on having fun - that’s more than £1,000 more than they spend on boring essentials, and is a 74% increase over the past ten years. It went on to predict that this trend was set to continue, and that pension freedoms would encourage people to spoil themselves a bit more in retirement

Pensioner property wealth is now over £850 billion, and all these family homes don’t look after themselves. The Senior Railcard survey put home renovations in the top 20 activities people got stuck into on retirement, and figures from ABTA found that almost a third of people who were considering raiding their pension pots under the new pension freedoms planned to spend the cash on their home. This seems like an eminently sensible investment - looking after what is undoubtedly their most valuable asset.

Unsurprisingly, while some pensioners are very well off indeed, others are struggling with debt. Figures from Key Retirement found that the average retiree has £34,000 of debt.

Most of this is mortgage borrowing - in many cases driven up by the number of people who unwittingly signed up to an interest-only mortgage. However, credit cards, overdrafts, and loans are also common. It’s why so many pensioners have used pension freedoms to access enough cash to pay their debts.

The day to day basics are swallowing up their fair share of pensioner cash too. On average, people aged 65-74 spend a third of their weekly income on essentials like food and bills - which is hardly living the high life.
The bank of gran and grandad has become an increasingly vital source of cash for families. According to Key Retirement, of those who release equity from their property, 21% of them use the cash to treat their children and grandchildren. This includes an average of £33,350 to help children get onto the property ladder, £6,000 to buy them a new car, £11,000 on family weddings, and £24,780 giving grandchildren a helping hand.

While retirees are quite rightly spending what they need to enjoy retirement, they are hardly all throwing caution to the wind, buying flash cars and spending the kids' inheritance.

Most expect to have something left over to pass onto their family after their death. Some 69% expect to leave property in their wills, and 75% expect to leave cash - according to - because while baby boomers know how to have fun - they also know how to save for the future.


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