Jeremy Hunt faces calls to overhaul state pension triple lock – now worth £221.20 a week
JEREMY Hunt faces pressure to scrap the state pension triple lock to improve public finances, forecasts say.
The Chancellor has been told an overhaul will free up cash and start paying off the country’s huge debts.
Warnings from the Organisation for Economic Co-operation and Development say the UK will avoid a recession next year.
But Ministers have been warned the country will have the second-slowest growing economy in the G7 in 2024.
The Paris-based body say reforming the triple lock will give the government more wriggle room especially when dealing with high energy prices and the war in Ukraine.
The Coalition government brought in rules in 2010 that pensions would rise by average earnings, inflation or 2.5 per cent.
But the Chancellor announced in his Autumn Statement last week that pensions would go up by 8.5 per cent.
It means the pension will rise from £10,600 to £11,502. The Institute of Fiscal Studies have said the triple lock increases state pension spending by a staggering £11 billion a year.
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The calls from the OECD, which is made up of 38 of the world’s richest countries, came in their Economic Outlook study.
They said: “Maintaining and strengthening current fiscal efforts is essential against the challenging backdrop of high borrowing and debt, and as higher debt interest payments have eroded fiscal headroom.
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“Reforming the costly triple lock uprating of state pensions would help, by indexing pensions to an average of CPI and wage inflation, and by providing direct transfers to poor pensioners to mitigate poverty risks.”
The organisation forecast that UK growth will rise from 0.5 per cent this year to 0.7 per cent in 2024 and then 1.2 per cent in 2025.
They added that interest rates will not be lowered by the Bank of England until 2025 with inflation staying above the 2 per cent target for the whole of next year.