Why The Triple Lock Is A Menace To UK Pensions
Millennials are the first to balk against the triple-lock mechanism because they are the ones shouldering the payments for pensions owed to earlier retirees, former generations who had planned for retirement. According to a study by Aegon, the younger generation finds linking the price of pensions to inflation rather than guaranteeing the triple lock is a better choice.
Millennials and even some Generation X are living in an era where wages are stagnant and they could only hope to earn something for their retirement through defined contribution plans offered by their employers. But they are unlikely to use their pensions given the state pension age is increasing beyond 70s, beyond the appointed retirement period.
While it could increase pensions for them even for defined contribution plans. If the government would introduce less increases to state pension, younger generations could benefit from it. Aegon estimates the younger generation, if they do push through with the pensions lock scrapping, could see a 2.5% increase in their final state pensions, way above their final salary pension during their retirement in the future.
UK Prime Minister Theresa May had expressed her concern over the pensions triple-lock and had assured all retirees that it would not be scrapped under her government. Mrs May said in the next parliament, prices could increase by 2.5 per cent, which guarantees the survival of the scheme.