The so-called triple lock for state pensions should be scrapped, the former pensions minister has said.
The costly protection which guarantees a yearly rise in line with either inflation, average earnings or 2.5 per cent - whichever is highest - should be dropped by the government to save billions of pounds, outgoing pensions minister Baroness Altman has said.
“The triple lock is a political construct, a totemic policy that is easy for politicians to trumpet, but from a pure policy perspective keeping it for ever doesn’t make sense," said Altmann, speaking to the Observer.
"I was proposing a double lock whereby either you increase state pension in line with prices or with earnings," she said, revealing that she had lobbied David Cameron to drop the 2.5 per cent rise when inflation an prices are low.
“Absolutely we must protect pensioner incomes, but the 2.5 per cent bit doesn’t make sense. If, for example, we went into a period of deflation where everything, both earnings and prices, was falling then putting pensions up 2.5 per cent is a bit out of all proportion. Politically nobody had the courage to stand up and say we have done what we needed to do.
The generous triple lock was introduced in 2010 but Altmann said she believed the guarantee could now be dropped under new Prime Minister Theresa May.