Andy Burnham says the change is fairer and asked people what they think
Andy Burnham announced the change (Image: CHRISTOPHER FURLONG, POOL/AFP via Getty Images)
Andy Burnham has provided clarification following proposed alterations to the State Pension. The Prime Minister has confirmed that should Labour secure victory at the next general election the party intends to reform the mechanism determining yearly increases.
Existing regulations mean that the State Pension increases each April by a figure based on the “triple lock“, meaning the rise corresponds to either the inflation rate, average earnings growth or 2.5% – whichever proves highest. But concerns have been raised over its long-term viability, given it has produced substantial growth in State Pension values.
Data from the Institute for Fiscal Studies reveals that since it was introduced in 2011, the triple lock has seen State Pension values rise considerably faster than had it followed solely prices or earnings. It said the pension was now approximately 14% higher than it would have been if it had only tracked earnings.
At present, most people on a full State Pension receive £241.30 a week. Under the triple lock this is likely to increase to approximately £250.70 a week in April 2027.
The proposed reforms, unveiled during the Labour Party Conference, mean the State Pension will no longer increase by whichever is highest of 2.5%, average earnings or inflation, but will instead rise by the greater of inflation and 2.5%. Funds generated through these modifications will go towards establishing a National Care Service, designed to address care costs borne by families while simultaneously alleviating pressures upon the NHS.
The government’s proposals have provoked a mixed response. Critics included Sharon Graham, general secretary of the Unite union, who cautioned that the plans risked amounting to “electoral suicide”, reports the Mirror. Conversely, Tom Pope, chief economist at the think tank Institute for Government, welcomed the move, stating the triple lock was “a much more sensible way to increase pensions”.
Andy Burnham has since taken to social media to clarify what the proposed changes would mean in practice – and to canvas public opinion. Writing on his Facebook page, he said: “I want to explain what’s happening with the Triple Lock and why.
“The first thing to know is this: The state pension will keep going up. The Triple Lock means your pension rises each year by whichever is highest: inflation, wages or 2.5%. So it’s always rising.
“That exact system will stay in place until the end of this Parliament. Then, pensions will still continue to rise every year. Going up at least by inflation or 2.5%, whichever is higher. And under these proposals, wages still matter too. The state pension will continue to keep pace with earnings over time.
“The savings generated from this adjustment will help to fund a National Care Service, so older people can have the security of a State Pension that keeps rising every year, and the peace of mind of knowing they won’t face catastrophic care costs if they need support later in life.
“I think this is a fairer deal for older people. What do you think?” The post generated thousands of responses alongside more than 18,000 likes, with opinions sharply divided.
David questioned: “Why is it that when the country needs to raise money it always looks at raising it from the poorest in society i.e. pensioners and people on benefits. State pension is not a benefit it is a payment from an insurance policy that has matured. If the tax rate on earnings over 200k were to be raised by 5% it would not affect the lifestyle of those earning it.”
It will come into effect in 2030 (Image: Getty)
Brenda suggested: “It would be fairer to give pensioners the living wage and link future increases to MP’s pay rises.”
However, Stephanie supported the proposal, stating: “It’s fair, and I speak as someone a few years away from state pension age who this will affect. If we want an NHS that works then we need a care system that works too. At least you’ve grasped the nettle, which is more than your predecessors did.”
Stephen concurred, saying: “I’m in my Seventies and think the proposed changes are a good compromise for both present pensioners and younger people who have to fund our pensions.”