Ministers may soon have to look at bringing in a means-tested model for the state pension, an expert has said.
Chris Rudden, head of investment consultants at wealth manager Moneyfarm, told Express.co.uk: “It is widely considered too much hassle to means test the state pension.
“However in a world where the distance between the haves and have nots is widening and with an ageing population in the UK, it’s important to make sure that those who really need help, can still get it.
”In a world where the triple lock starts to get questioned more, it seems sensible to look at the feasibility of means testing the state pension, so those without meaningful assets, property or personal pensions and investments could still get a pension that rises in line with the cost of living in a more sustainable way for the Government.”
He said bringing in a means-tested scheme would involve a lot of one-off work but “could future proof the levels of state pension for those that really need it”.
His comments come after another expert suggested a one-off boost to the state pension of around £600 a month with the triple lock then scrapped.
Mr Rudden said the rising cost of the state pension is bringing into question the future of the triple lock pledge.
He commented: “Pensions are one of the highest segments of annual Government spending, which was nearly 40 percent more than the amount spent on education in 2022/2023 (£141billion vs £105billion).
“So, this is a big cost to the Government and more than it is spending to develop the next generation. With the increases in the state pension in the last few years with the triple lock and the fact that the Government has frozen the tax thresholds, it means that pensioners may end up paying tax on some of their state pension soon.”
The full new state pension is now £221.20 a week, or £11,500 a year, which is just over £1,000 a year away from being subject to income tax.
Another concern is that the triple lock is making the state pension unaffordable, after a large increase of 8.5 percent in payments in April this year and a record 10.1 percent last year.
Steven Cameron, pensions director at Aegon, put forward an alternative to the triple lock metric to determine the increase in the state pension.
He said: “In order to smooth the volatility we are currently seeing within the determinants of the triple lock, I would like to see a move away from the current three-way comparison made on a year-on-year basis.
“Rather than basing the triple lock on inflation and earnings growth for specific periods of the previous year, I’d recommend averaging the earnings growth component over a three-year period.
“This would smooth out excessive volatility, while allowing state pensioners to receive an increase that at least matches inflation, with higher increases in periods of sustained real earnings growth.”
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