The idea that Tory grandee William Hague, who has a generous parliamentary pension, should express the need to lift the “triple lock” on state pensions is presumptuous.
Admittedly, the triple lock is largely a political tool, devised in 2010 by former chancellor George Osborne with the aim of keeping older voters on board.
It stipulates that the state pension will increase each year in line with prices, average earnings or by 2.5 percent – whichever is higher.
There were muted complaints about poor performance as inflation hovered at or around the Bank of England’s target rate of 2 percent.
It was only with the outbreak of the pandemic and Putin’s war against Ukraine, which led to double-digit inflation, that politicians decided that the current solution was unsustainable.
Safety net: The ‘triple lock’ promises that the state pension will rise each year in line with prices, average earnings or 2.5% – whichever is higher
The current system is arbitrary and lacks economic rigor.
Switching between different data sets to determine annual increases could potentially lead to bizarre results. It is also a nightmare for forecasters making longer-term forecasts for public finances.
The fundamental question the government should address is whether state pensions are deferred wages and should always be linked to average earnings.
Or are they an advantage like any other and should be automatically reassessed by the consumer price index?
From today’s perspective, average earnings, which are now just under 8 percent, will be the benchmark for an increase this year.
Most of the country’s workers view the state pension as an entitlement because they have paid National Insurance Contributions (NICS) for most of their lives.
The link is a trick. There is no concept of ring-fenced funds for the UK Treasury.
The way the UK manages its retirement arrangements is very different to the US, where the equivalent social security system is fully funded. What scares those in government overwhelmed with big fiscal decisions is the talk.
In its latest report, Tax And Public Finances, the Institute for Fiscal Studies found that 23 percent of adults in the UK are currently over retirement age.
This proportion is expected to increase to 27 percent by 2040 and 30 percent by 2070. An aging population could consume up to 45 percent of national income by the 2040s, posing a major financial challenge.
It might not be so scary if public finances were in better shape. The debt ratio has risen to almost 100 percent due to shocks related to the financial crisis.
A strange intergenerational debate has also emerged, fueled in part by the Resolution Foundation think tank.
It has been possible to convince parts of the population that younger people today are doing poorly compared to baby boomers and that there needs to be a change from old to young.
Former Conservative pensions minister Ros Altmann rejects a political debate that says an 8 per cent rise in the state pension is unaffordable.
An 8 per cent increase in the basic pension would increase payouts to £168.70 a week or £8,770 a year.
Living on that and having no other income is a challenge. The UK state pension is extremely mediocre, well below the £507 a week in Germany and £513 in Spain.
The final insult to wealthier pensioners with occupational funds is that part of the state pension is subject to income tax. So much for freeriding for silver surfers.
Regularizing the general pension increase is a good idea.
Earnings linkage is the most rational, as shown in 2023. It tends to follow the cost of living with a time lag.
Efforts to limit the increases would betray the postwar social contract from cradle to grave.
Associated British Food boss George Weston’s decision to wade into the public debate about shoplifting and staff abuse in stores was not taken lightly.
The Westons tend to prefer a low-profile demeanor. He fears the wave of hooliganism at his Primark stores has reached unacceptable levels and is affecting performance and safety.
It may even have become a source of income for organized crime. But the police and courts seem to be indifferent.
If there is any consolation to be drawn from this, it is that Britain is not alone.
Primark sees similar misconduct in France, Spain and the USA.
In American malls, competitors have taken to locking socks in closets.
Such measures may be necessary in Britain after social media sparked a series of lootings on Oxford Street last month.
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