State Pension: Triple Lock

Question

15:22:00

Asked by

To ask His Majesty’s Government whether they have any plans to change the “triple lock” guarantee for state pensions.

My Lords, our commitment to the triple lock for the entirety of this Parliament means that spending on people’s state pensions is forecast to rise by over £31 billion. As a result, the yearly state pension will have increased by up to £1,900 by the end of the Parliament. Protecting the triple lock, even in the current economic climate, shows our commitment to pensioners.

I thank the Minister for that Answer and for her commitment to the triple lock. Does she understand the concern among many recipients of the state pension about the long-term future of the triple lock, given a number of recent developments? First, there was the appointment of a Pensions Minister who has described the triple lock as “silly”, “messy” and something that needs to be replaced. Then the leader of the Opposition said last week that her party wants to explore greater means testing of government support, which has given rise to some speculation on this issue. Many pensioners have already suffered as a result of the loss of the winter fuel allowance, which came completely out of the blue and was not in the manifesto. Given that the UK state pension level is one of the lowest in the developed economies of the world, relative to average earnings, can the Minister give a long-term commitment that the triple lock will remain as long as her party is in power?

My Lords, I am certainly not going to answer for the leader of the Opposition. I will allow others who are rather better qualified than I am to do that. But I can assure her that the idea of means testing the triple lock, even if its meaning were clear, is not something we on these Benches embrace. I can tell the noble Lord very clearly that we have a manifesto commitment that the triple lock will hold for the entirety of this Parliament. That is a huge commitment. The noble Lord mentioned winter fuel payments. Means testing those meant that a number of pensioners lost a sum of £200 or £300. By contrast, the amount of money we are investing in the state pension will mean that the annual rate will go up by up to £1,900 by the end of this Parliament. The comments by my colleague, the Minister for Pensions, Torsten Bell, were made as a private individual when he was the head of a think tank. It is the job of heads of think tanks to think big ideas and to talk about them. However, I assure the House that Minister Bell, along with me, is fully committed to the triple lock and the Government’s commitment to it. I hope the nation’s pensioners will be delighted to hear that.

Does the Minister agree that there is an inconsistency in the triple lock between younger pensioners, who tend to be better off and for whom the triple lock provides protection for their full new state pension, and the oldest pensioners, who tend to be poorer, or those on pension credit, who either have only the basic state pension triple lock protected, or, in the case of pension credit, no triple lock protection at all? Is there any plan for a review of how, generally speaking, the distribution of incomes among pensioners and the protection provided by the triple lock interact?

The noble Baroness has raised a number of important and connected questions. Let me pick a couple of them out—as many as I can in the time. First, on the distinction between those on the old basic state pension and those on the new state pension, it is not a straight read across that people on one are getting more than people on the other. As she knows, it depends, of course, on what the national insurance contribution rates were and how many years they worked. How much contribution they made determines how much they will get. It is also a fact that many people on the basic state pension were contracted out and therefore will have occupational pensions and will have paid lower national insurance contributions as a result. Whichever of those state pensions people get, we will guarantee that it will go up by the triple lock, which is a massive investment, given the economic climate, and a huge investment in pensions. On the broader question, the noble Baroness will know that in the second stage of the pensions review we will look at the whole question of the adequacy of pensions. We need to have in our country a system designed to be built, as she knows as a former Pensions Minister, on the foundation of the state pension but with an adequate second pension coming from occupational provision. On that, auto-enrolment, investment in the system, addressing gender pay gaps, and a whole range of questions are important. I will stop talking now as I have talked for far too long. The point is that we are investing in pensioners, we will get the pensions market working and we want this to work for everybody.

My Lords, despite the triple lock, some 2 million pensioners live in poverty, and those numbers will increase because pensioners who live below the poverty line will be denied the winter fuel payment. In light of that, I urge the Minister to restore the full winter fuel payment to all pensioners below the poverty line. If the Minister is going to say that there is some kind of financial black hole, I can suggest tens of ways of filling it. So can the Minister please proceed in making sure that pensioners below the poverty line get the winter fuel payment in full?

My Lords, if my noble friend has lots of good ideas about filling in the financial black hole this Government inherited, I would certainly be glad to hear them, and so too would my colleague the Chancellor of the Exchequer. So I encourage him to make a Budget submission and I look forward to reading it. On the question of pensioners, we were very careful. Means testing the winter fuel payment was not a decision we wanted to take, and we were careful to protect the poorest pensioners—those entitled to pension credit. Those who get pension credit can also find themselves accessing a wide range of other passported benefits that will help support them. We also managed, despite the circumstances, to find the money to maintain the household support fund and to extend it into next year, so that, if there are people still struggling, there is help for them. There is also plenty of other help and a range of support out there for pensioners, including the warm home discount and cold weather payment. I understand how tough this is. I know that the cost of living is high but the Government are determined to do all they can to make things as easy as possible for people despite the circumstances.

My Lords, it is interesting to note that, at the recent general election, the average voter in the average constituency was aged over 55. The demographics are interesting; there are lots of these people, and they matter. The last Government recognised and addressed pension poverty, and the need to support pensioners. The Minister will know that we took 200,000 pensioners out of absolute poverty. Those figures go back to 2010. I find it extraordinary that Labour’s own analysis shows a reversal of 25% of this in the first year alone. On the pensions review, can the Minister tell us a bit more about the timing—when we are going to see some action? In my view, this is yet another review, of many. We are not really seeing action.

That was a little ungracious, I fear, but I will unpick those points one at a time. First, on poverty, let us have a little statistics duel. The last Labour Government lifted a million pensioners out of poverty. Meanwhile, relative pensioner poverty saw a slight increase in the decade between 2010-11, when Labour was last in power, and 2022-23, the period for which we have the latest statistics. We all have challenges to face here, but this Government are determined to work on that. On the pensions review, as I have explained to the noble Viscount before, stage 1 was focused on making sure that the market was working properly. Stage 2, which follows next, will focus on making sure that we have the appropriate levels of saving in the market and that people have the vehicles in which to invest. We are determined to do this but we cannot fix the entire pensions market overnight. If we tried to do that, we would make mistakes and the noble Viscount would take me to task, rightly, for those. We will do this in the right time, not the fastest time.

My Lords, 1.2 million pensioner households are dependent on the state pension. This includes three times more women than men in single-pensioner households. Does the Minister agree that to abandon the triple lock guarantee would plunge the poorest of pensioners into even deeper poverty and inflict hardship on many others who do not have the security of generous additional pensions?

My Lords, I have made our position very clear on the triple lock: this Government are committed to the triple lock for the entirety of this Parliament. I am glad to be able to confirm that again today. However, underneath the noble Baroness’s question is something important about the gender pensions gap. I know that the noble Baroness has raised this before; I commend her for her commitment to this issue, which I share. There are two things that I would say on this. First, the gender pensions gap starts with the gender pay gap, and this Government are determined to tackle that. For example, we have brought in gender pay audits. Once they come into place, we will be able to see what is happening on the ground, then address it and make it better. Secondly, the new set-up is better. Under the new state pension, we are finding that women pensioners are getting about 98% of what their male counterparts are getting; this was not the case under the old system. Between these two things, and the review to make sure that private pensions work, as well as making sure that we get people into auto-enrolment, and that they get enough return on their investments, I hope that, bit by bit, we will improve the system for all pensioners, including women. I thank the noble Baroness for continuing to raise this in the House; it is an incredibly important issue.

My Lords—

My Lords—

It is the turn of the Labour Benches.

My Lords, can I assure the Minister that her confirmation today that the Labour Government will keep the triple lock for the whole of the Parliament is the best news for pensioners? I say that as co-chair of the APPG for pensioners and as a former director of Age Concern. We are really grateful to the Minister for that reassurance.

My Lords, I am very glad to be able to give my noble friend that news, especially on his birthday. What better present could he possibly want?