Prime Minister Andy Burnham's proposal to replace the state pension triple lock with an adjusted system could leave pensioners £1,600 a year worse off by 2050, according to new analysis.
The current triple lock raises the state pension by whichever is largest of 2.5 percent, inflation, or average wage growth. Under the revised plan, the pension would increase by the highest of 2.5 percent, inflation, or the figure needed to keep its relative value to average household income.
Projected pension values under the new system
Those who retired after April 2016 receive the 'new' state pension, worth £12,547.60 annually. Those who retired before that date qualify for the 'old' basic state pension worth £9,614.80 every year, and most also get the 'additional' pension.
Pension advisers calculated that the state pension should reach £35,100 annually by 2050 under the existing triple lock. Under the revised scheme, it would be worth £33,500 — or £1,600 less for every pensioner.
Savings to fund a National Care Service
Burnham said the expected savings, worth billions, should be used to establish a new 'National Care Service' for social care in England, which is currently provided by local councils.
The triple lock was first introduced by the Cameron government in 2012, and is now thought to cost the taxpayer £12.6bn. By 2029-30, it should cost £15.5bn, according to the Office for Budget Responsibility.
Calum Cooper, from adviser Hymans Robertson, said: "Pensioner poverty has not disappeared and the idea that pensioners are universally wealthy masks significant disparities in retirement incomes across Britain."
Government defends the adjusted triple lock
A government spokesperson insisted the 'adjusted' triple lock would be a 'better deal for pensioners'.
The DWP statement said: "This settlement is a better deal for pensioners and their families and ensure the state pension system rises every single year – by at least the highest of 2.5%, CPI inflation or a new earnings link.
"We are committed to the triple lock for the rest of this parliament, which will see the new state pension rise by over £2,000 and reach a forecasted record high by April 2029. The adjusted triple lock will build on the gains the policy has made for pensioners."
