The incoming Govenment faces some tough choices when it comes to changing the triple lock, an expert has warned.
The Conservative party announced this week plans to increase the personal allowance each year using the triple lock metric, to reduce keep down tax bills for state pensioners.
Mike Ambery, retirement savings director at Standard Life, part of Phoenix Group, said the growing costs of the increase to the state pension will force Government action before too long.
He said: “The state pension cost an estimated £125billion in the tax year 2023 to 2024, so it forms a sizeable chunk of public spending and as the UK has an ageing population this is likely to increase in the future.
“The next Government will have three main options if they view the current system as unaffordable – raise the state pension age further and more quickly than currently planned, means test the state pension or remove the triple lock and replace it with a double lock or another less generous option.
Mr Ambery said: “There used to be age-related additions to the personal allowance, but these were phased out in the early 2010s. Bringing these back could help to protect pensioners with modest incomes from paying tax.
“The Government could also consider ending the current personal allowance freeze and raising it in line with inflation, which would have the benefit of helping workers as well as pensioners.
”Both of these options would hit the Treasury and questions around the affordability of the state pension will continue with or without personal allowance reform.”
The state pension increased 8.5 percent in April in line with the triple lock, after a record 10.1 percent increase the year before, thanks to the policy.
The full basic state pension is now £169.50 a week while the full new state pension is £221.20 a week.
You can check how much state pension you are on track to receive using the state pension forecast tool on the Government website.
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