Prime Minister Rishi Sunak has proposed upgrading the state pension ‘triple-lock’ to a ‘quadruple-lock’ as the Conservatives attempt to rein in Labour’s general election poll lead.
Under the proposal, the ‘personal allowance’ – above which you pay basic-rate income tax – for those over state pension age would also increase by the highest of average earnings growth, inflation or 2.5%.
However, reports suggest the pledge would not apply to those below state pension age, creating a new tax divide between the old and the young.
A survey of over 2,000 UK adults commissioned by AJ Bell* demonstrates why Sunak has chosen to super-charge the triple-lock, with strong support for the policy among older voters:
- Two-thirds (41%) of those aged 65+ said they would be less likely to vote for a party that proposed ditching the triple-lock in favour of an inflation link versus 12% who said they would be more likely to vote for that party
- However, this flips for those aged 18-34, with 37% saying they would be more likely to support a party that proposed scrapping the triple-lock versus 17% who would be less likely
Tom Selby, director of public policy at AJ Bell, comments: “The next government should really be reviewing the state pension triple-lock and setting out a clear goal for the policy. Instead, Rishi Sunak has doubled down by promising not only to keep the pledge but extend it to the personal allowance for those over state pension age. This is a fairly naked grab for pensioner votes that the Conservatives know will be crucial if it is to claw back Labour’s massive poll lead.
“The fact Sunak has not promised to increase the personal allowance for younger voters at the same time means he would effectively be driving a wedge between generations via the tax system. Creating a separate tax threshold for older people would also add unwelcome complexity to the income tax framework.
“Beyond pure election tactics, it is hard to think of a good reason to increase the personal allowance for pensioners alone. It would make much more sense to come clean about the aim of the triple-lock, which has never been articulated, and then set a sensible path to achieving that aim. Instead, we are left with the random ratchet of the triple-lock with no clear goal, and the increasing likelihood the state pension age will need to rise faster to cover the cost – meaning it will be those below state pension age who end up paying the price again.”
Triple-lock policy popular among older voters…but not the young
“Older voters continue to hold the keys to Downing Street, so we should perhaps not be surprised that Sunak has moved to super-charge the triple-lock to win them over. However, there is a serious generational divide when it comes to the policy, with older people attracted to the pledge and younger voters much less keen.
“This likely reflects the vested interests of both cohorts, with those in receipt of the state pension keen to keep bolstering their incomes, while younger people are perhaps fearful of the impact hiking the state pension today could have on their future state pension entitlement or other areas of public spending. While committing to the triple-lock was the easy choice for both major parties politically, the demographic timebomb hitting the UK means at some point the next government will need to address the fundamental questions of what the state pension should be worth and when people should receive it.”
