The state pension is at risk of losing the triple lock mechanism, which raises the payments each year, as a result of the coronavirus pandemic. Economist Vicky Pryce warned pensioners may not get as good a deal as they have in the past. It comes as a think-tank has also suggested the current system could be scrapped.
Speaking to Sky News, Ms Pryce said: “One would imagine that the state pensions would continue as they have been.
“There are suggestions that one might have to rethink pensions in the future because the triple lock might go.
“Pensioners may just not get as good a deal as they have been getting in the past.
“There is a big issue about those who are putting money aside now if they’re lucky enough to still have a job and be able to do that.
“In terms of what pension they may get in the future given that stock markets have not behaved well recently.
“They crashed for a bit but they have recovered somewhat in recent days and there are concerns in the number of areas pensioners can put their money into where some of these firms may not exist in the future.”
The think-tank, Social Market Foundation (SMF), has suggested that the coalition Government policy should be scrapped as part of an “intergenerational reciprocation” for the costs of battling COVID-19.
In the paper, “Intergenerational fairness in the coronavirus economy”, SMF suggested a double lock system should replace the triple lock mechanism.
It said the replacement of systems would save up to £4billion a year meaning savings of around £20billion over the next five years.
It stated: “The ‘triple lock’ ensuring substantial rises in the basic state pension triple should be replaced with a ‘double lock’, tying increases to earnings or inflation (whichever is higher).
“This could contribute £20billion to deficit reduction over the next five years.
“Pensions would still rise, but less quickly, reducing the fiscal burden on the working-age population.”
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It comes as Ms Pryce also warned the retirement age could be extended due to the country’s crippled economy.
She said: “What we’ve already seen is that if you look at one part of the working population such as women who end up with their wealth at the time of reaching pensionable age that they feel they have to work longer because they have one-fifth of what the average man has.
“Now we can find that people are reaching pensionable age and lots of their assets perhaps are being destroyed, house prices have fallen, and of course, incomes have gone down as well.
“So you probably need to work longer, I’m sorry to have to say.”
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