Young people could have the most to lose if the pensions triple lock is scrapped, new research has revealed.
Despite a recent survey indicating that just 38 per cent of young people aged between 18-30 would like to see an end to the triple lock system and 43 per cent favour a pensions increase relative to price inflation instead, closing the triple lock scheme would adversely affect many young people when they come to retire.
The pensions triple lock which was introduced by the coalition government in 2010, guarantees that the basic state pension will increase each year based on whichever is the highest – inflation, wages or a minimum of 2.5 per cent. In May, Aon reported that the system was being viewed as "unsustainable" and was under governmental review.
But according to Aegon who conducted the latest research, younger workers who are not due to retire for another fifty years could miss out from a pension that is constantly being increased by a minimum of 2.5 per cent before and after they retire. Aegon pensions director Steven Cameron claims this highlights the "intergenerational impacts" that policy changes can have in the present as well as in the future as peoples' priorities change over time.
"It is the income tax and National Insurance contributions of today's working population that are funding the payments those in retirement receive," he added.
David Parfett, senior corporate pensions consultant at Aon Employee Benefits insisted that removing the triple-lock would likely only have minimal savings, particularly given future expectations of inflation.
Interestingly, Aegon research also found that nearly 75 per cent of those aged 70 and over want to keep the pensions triple lock rather than introducing a single or double-lock system which removes the 2.5 per cent aspect all together. 68 per cent of the over 60s and 49 per cent of the over 40s also support the current system.
However, despite previous government pledges to replace the triple-lock guarantee, it is now unlikely the system will be changed at all following Theresa May's failure to win an overall majority in the general election. Instead, the government will need to rely on additional votes by Democratic Unionist Party (DUP) in Northern Ireland, who previously stated in their manifesto that there would be no change to pensions triple lock.
Parfett added: "It seems likely that the minority Conservative Government will be reconsidering the pension pledge of a triple lock ahead of the Queen's speech, but at what cost to future generations? Politicians must accept some responsibility and act together to address the genuine risk of millennials being the first generation to be poorer than their predecessors."
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