Sunday 6 November 2016 10:06 am

MPs want to scrap the pensions triple lock to help millennials

A group of top MPs have called on the government to scrap the favourable triple lock on state pensions because it favours the baby boomer generation over struggling millennials. 

The MPs said the promise to guarantee the state pension with a yearly rise in line with either inflation, average earnings or 2.5 per cent, whichever is highest, is unfair and unsustainable.

Read more: Scrap the state pension "triple lock" urges ex-pensions minister

Chair of the work and pensions committee Frank Filed said: “Great strides have been made against the scourge of pensioner poverty and the new state pension is at a level to provide an effective minimum income and encourage personal saving.

"It is time for the triple lock to be shelved. The system we propose protects pensioners and allows them to share the proceeds of future good times, but at the same time is inter-generationally fair. We call on all parties to get behind it.”

In a new report, the committee found the guarantee contributed toward an economy "skewed" towards older generations while leaving younger people worse off. 

They called on a new link between earnings and state pensions that is more "fiscally sustainable" before the next General Election, with cross-party consensus.

Read more: Theresa May will be more radical on savings and pensions than you think

The report also pointed towards figures which indicate pensioner income is now higher than that of those who are od working age, stripping out housing costs, while millennials face being the first generation to be worse of than predecessors. MPs also found that children are now more than twice as likely to be in poverty than pensioners.

"Each generation is supported in retirement by their in-work successors. This is supported by all age groups, but a combination of factors has sent the balance out of kilter," said Field.

"It is now the working young and their children who face the daunting challenge of getting on in an economy skewed against them. Homeownership, taken as a given by many in my generation, is out of reach for too many aspiring young people today. At the same time as tightening their belts, they are being asked to support a group that has fared relatively well in recent years."

Instead of the triple lock, MPs propose a benchmark, below which the amount of the pension would not fall as a proportion of average earnings. But, it would also be protected if earnings were to lag behind inflation to ensure they did not lose out.