The state pension triple lock is set to be scrapped for some Britons. (Image: Getty)
The first place in the British Isles to scrap the will be the Isle Of Man – with fears it could be the first of many.
The Isle of Man is not technically part of the UK but is a Crown Dependency, and its people are classified as British and Manx.
The island has announced plans to scrap the for people living on the Isle of Man who reach retirement age in 2019 after raising the alarm that its funds for pensions could be ‘exhausted’ in as little as 25 years if the change isn’t made.
The is a system in which pensions are guaranteed to rise by the same as wages, inflation or a flat 2.5% each year, whichever is highest.
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The scrapping of the in the Isle Of Man will affect those who reached age after April 5, 2019, and pensions would instead rise by 2% or inflation each year, whichever was higher – effectively a ‘double lock’, axing the wage growth element.
The proposed change has been put forward and will be finalised in February.
Pensioners who reach pension age after 2019 will see a 2.2% pension rise, while those on the old system will get a 4.1% increase. This immediately highlights how pensioners will often be worse off without the .
With the Isle Of Man scrapping its , there are fears the UK could follow.
Conservative leader Kemi Badenoch has already floated the idea of making state pensions means tested.
Though the current Labour government has committed to the through to 2028, the former pensions minister who first brought in the system told Radio 4 that it is not going to stay in place ‘indefinitely’ even though it is ‘still needed for now’.
Sir Stephen Webb told the Today programme: “I think there is a case for keeping it now, but not indefinitely.”
The Office for Budget Responsibility has previously identified the as a “fiscal risk”. This is due to its so called ‘ratcheting effect’, which leaves public finances exposed to higher pension costs.
The Institute for Fiscal Studies says that the makes planning the government’s finances difficult because the combination of its three components is difficult to forecast, as is the exact number of recipients with a full National Insurance record claiming the full , and the number of years they will be claiming for.
Their current estimates for spending on the by 2050 range from £5 billion to £45 billion per year due to that uncertainty.
According to the House of Commons Library, The Organisation for Economic Co-operation and Development (OECD) has suggested that pensions should be uprated by an average of earnings growth and CPI inflation, alongside additional means-tested support for poorer pensioners.