Triple Lock Could Push Pension Age Above Life Expectancy in Some Areas


February 2017

Triple Lock Could Push Pension Age Above Life Expectancy in Some Areas

A committee of MPs has warned that the increasing costs of the triple-lock policy may mean that the state pension age rises above 70 - higher than the average life expectancy in many poorer areas of the UK.

The triple-lock policy means that the value of the state pension must go up each year by whichever is highest out of inflation, wage growth or 2.5%. Since 2010, when the policy was introduced, the state pension has increased in value by £1,100.

Total expenditure on pensions amounts to around 6% of GDP and in order to maintain this, the state pension age needs to be steadily increased as well. Currently, the state pension age (SPA) for men is 65, and the same will be the case for women by 2018, with both going up to 67 by 2028.

The Work and Pensions Committee, which had already signalled its opposition to the triple-lock last year, commissioned the Institute of Fiscal Studies to estimate the effect of the policy on the SPA into the future. According to its findings, by 2060, the SPA would have to go up to 70.5.

In 26 areas in England, and 162 areas in Scotland, the average male life expectancy is below 70.5. These were invariably more deprived areas. The lowest male life expectancy in England was 67.5 in Blackpool, where the average level of pre-tax personal income is £19,500 - “around £8,000 below the national average and the lowest in the entire North west” according to the website Lancashire Vital Signs. 18% of Blackpool’s households are currently in fuel poverty, while the national average is just below 11%. The lowest life expectancy in Scotland is in an area of Glasgow and is just 62.5.

The IFS’ research also found that due to the triple-lock, the state pension has gone up by 22.2%. This compares to 12.3% CPI inflation and 7.6% wage growth over the same period.

In order to keep the state pension affordable within the national budget, the Work and Pensions Committee is suggesting that the triple-lock be replaced with a “sooth earnings link” - something that will, by the IFS’ estimate, same around 0.8% of GDP each year.

The committee’s chairman, Frank Field, said: “With the triple-lock in place, the only way state pension expenditure can be made sustainable is to keep raising the state pension age.

“This has the effect of excluding ever more people from the state pension altogether.

“Such people will disproportionately be from more deprived areas and manual occupations, while those benefitting most will be the relatively prosperous.”

The government has already signalled its intention to keep the triple lock in place at least until 2020, and former pensions minster Sir Steve Webb criticised the committee’s report for jumping to a “very partial and incomplete conclusion”.