The state pension triple lock is not sustainable in the very long term, although it could help the government to bring the state pension up to a more appropriate level in the medium term, Institute for Fiscal Studies (IFS) director, Paul Johnson, has said.

Speaking at the PLSA Investment Conference 2024, Johnson said that the UK state pension is “broadly speaking, pretty sustainable”, pointing out that it is "not very expensive by international standards".

However, Johnson warned that the triple lock is "not very rational, because we have no idea what the level of the pension will be in 10 years’ time", and is instead dependent on annual fluctuations between earnings, prices and 2.5 per cent.

He also stressed that the triple lock is particularly problematic in the very long run, as state pension increases would continue to "rachet upwards", until they eventually took up 100 per cent of national income.

Despite this, Johnson suggested that the triple lock can play a role in helping to increase the basic state pension to a more appropriate level in the medium term, arguing that this would be "the most politically acceptable way of getting [the state pension to] a higher level again".

"In the service of honesty and transparency, I think we should say we want the state pension to be at a particular fraction of average earnings, that might be 30 per cent, it might be 33 per cent, but that's a political decision," he stated.

"Perhaps we'll keep the triple lock until we get it there, but at that point, we will stop the triple lock and just revert to earnings increases. That would be a rational thing to do with it."

Even this approach, however, could present issues, according to Johnson, as it still gives "no sense of how long it will take to get to a more appropriate state pension level.

"I'd rather we said we want to get here, and we're going to do it in 10 years in a reasonably rational way, because you've got to stop at some point and decide where you want the pension."

Speaking earlier in the session, Johnson suggested that changes in state pension age could also play a role in addressing cost concerns, although he stressed the need to balance this with increasing pensioner poverty.

"I'm all in favour actually of increasing state pension age gradually over time, I think we've got no option but to do that given what's been happening to longevity," he stated.

"But there's a big issue we need to sort out here, which is very big increases in poverty rates among people just below state pension age as the pension age has increased."

Johnson also clarified that the savers at risk are not those at state pension age, but just under state pension age, pointing out that the state system is much less generous at this age, with a 65-year-old able to receive less than half the minimum benefit as a 66-year-old.

In particular, Johnson noted that there has been a gradual increase in the fraction of women aged 60-64 who are in poverty as the state pension age rose to 66.

"It's having quite a big effect on poverty at those ages in the in the 60s and we think this is something we do need to deal with," he added.

---