The Institute for Fiscal Studies (IFS) has warned that the state pension triple lock policy is 'not sustainable' and may need to be scaled back to protect the future pensions of working-age Britons. The think-tank's report highlights that spending on pensioners now accounts for 5.5% of national income, compared to 4.3% for working-age benefits, the widest gap since records began in the 1970s.
Under the triple lock, the state pension increases annually by the highest of inflation, earnings growth, or 2.5%. The IFS cautioned that continuing this policy could lead to pensions consuming an ever-growing share of national income, potentially leaving the current working-age population without the same level of generosity in retirement.
The report noted that real spending per working-age adult fell from £3,200 in 2010 to £2,500, while pensioner spending has steadily risen over decades. The IFS attributed this to 'significant cuts to the working-age benefit system' while protecting pensioner benefits. In April, the government is set to increase the state pension by 10.1% to match inflation.
The IFS also raised concerns about the labour market, noting that while employment is near a record 33 million, many are in part-time roles. Incentives to move to full-time work have been weakened by in-work benefits and taxation, with workers losing up to 58p for every extra pound earned through taxes or withdrawn benefits, up from 52p 25 years ago.
A Department for Work and Pensions spokesperson defended the government's approach, stating: 'We have extended intensive support to almost a quarter of a million claimants in work but on low pay and from September we'll be rolling out our ramped up In-Work Progression Offer.' The spokesperson also highlighted skills provision through apprenticeships and bootcamps to help claimants enhance their earnings and career prospects.
