The flaws inherent in a triple lock on the bedrock of the welfare state | State pensions
The triple lock needs reform, but the wealth tax suggested by Owen Jones as a way of recouping revenue from wealthy pensioners will create other problems (The poor need the money, the rich may not – but I say hands off the state pension triple lock, 27 March).
One of the flaws in the existing triple lock is that the annual increase is determined as the greater of the yearly inflation rate and average wage increases in the year, with an underpin of 2.5%. But a one-off jump in inflation one year can easily be followed by a greater wage increase the next as salaries catch up, so the state pension benefits from two larger-than-usual increases rather than one. This can easily be mitigated by basing the state pension on the greater of cumulative inflation and wage increases rather than just using the yearly figures.
The existing system effectively includes an element of means-testing in that the pension is subject to income tax, so those in higher tax bands do return a proportion of their pensions to the Treasury. A wealth tax would create undue stress for pensioners on low incomes with few liquid assets living in properties whose value has soared in recent years – a particularly acute problem in the south-east. Inheritance tax rates might be a less draconian means of achieving a similar result.
Jan Kamieniecki
London
Owen Jones suffers from the delusion that owning your own house makes you rich. He talks of pensioners “sitting on golden eggs”. Being rich means having lots of money to spend. Owning your own house puts nothing into your bank account. The only way you can make money from your house is by selling it, and then you’re either living on the street or spending all that money buying another house. House-owners may be wealthy, but they’re not necessarily rich.
Michael Bulley
Chalon-sur-Saône, France
Owen Jones’s excellent summary of why a universal state pension is the bedrock of the welfare state falls into the trap of assuming that, because a majority of older people voted Tory at the last election, they always will. In 1997, people aged 65 and over voted 41% Labour and 36% Conservative. I would urge Labour not to write off older voters but to focus on the grandparent vote. We care more about our children’s and grandchildren’s wellbeing than our own. This chimes well with Labour’s agendas on the environment, health and workers’ rights. If Labour could add a radical policy on social care, putting it on an equal footing with the NHS, that would go a long way towards securing a majority among older voters.
Prof Alan Walker
University of Sheffield
Owen Jones gives a very balanced view of the issue, but how can he almost ignore the “3 million pensioners with household wealth valued at over £1m?” Money is being thrown at 3 million people who clearly don’t need it. He describes means-testing as “expensive and bureaucratic”, but that is no longer the case thanks to the huge bank of data that is in the public domain.
The powers that be know that I own a detached house in the Cotswolds. They know that I have inherited a holiday flat in north Wales and they know full well that I receive a teacher’s pension. Those three facts alone prove that I don’t need to benefit from a triple-locked state pension, let alone a winter fuel allowance. Until a fairer way of apportioning pension funds is devised, the triple lock will continue to be a wasteful use of public money.
Bob Forster
Shipton-under-Wychwood, Oxfordshire
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