Personal Finance

Pensions: three main parties back triple-lock guarantee

The Conservatives, Labour and the Liberal Democrats have pledged to keep the pensions “triple-lock” system, should they win the general election in May.

The lock, which was introduced by the coalition government, ensures that the basic state pension will always rise in line with earnings, inflation or 2.5 per cent – whichever is higher.

The Tory manifesto, published this week, confirmed that the party would keep the system and also ensure that people can pass on their pension savings to loved ones tax-free.

Pensioner benefits such as free bus passes, TV licences and prescriptions would also be maintained under a Conservative government. However, a new “temperature test” would prevent expats in hot countries from receiving the Winter Fuel Payment, and tax relief on pension contributions would be restricted for those earning more than £150,000.

Labour said it would also keep the triple-lock system and restrict tax relief on pension contributions for the highest earners. The party wants to end Winter Fuel Payments for the richest five per cent of pensioners, but would make no changes to the free TV licences or bus passes.

The Liberal Democrats manifesto went further with its triple lock plans, promising to enshrine the system into law to guarantee a “decent” pensions rise each year.

Ukip described the triple lock as a welcome reform, but said that raising the retirement age to 66 by 2020 and to 67 by 2028 was a “hugely unpopular” move.

Instead, the party proposes a flexible state pension window, which allows pensioners to take a “slightly lower” weekly state pension from the age of 65. Nigel Farage’s party also wants to increase the amount and improve the standard of pension advice available to the public.

Meanwhile, the Green party claims it would introduce a Citizen’s Pension, paid to all pensioners regardless of their contribution record from 2016. Single pensioners would initially receive £180 per week, while couples would receive £310 per week, with future increases based on inflation or earnings.

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