Changing the state pension system could raise the number of people not saving enough for retirement from nearly 15 million under the triple lock to over 25 million if the state pension was linked only to the consumer price index (CPI), according to LCP partner, Steve Webb.

In a Society of Pension Professionals webinar on the state pension, Webb highlighted LCP findings that showed that if the triple lock was removed and the state pension was only earnings-linked, 19 to 20 million people would not be saving enough for retirement.

Meanwhile, if the state pension was instead only linked to CPI, it would mean over 25 million people would have an inadequate retirement income.

"That is roughly one in three of the working-age population. If we go back to CPI linking the state pension, [many] will not even have the basic minimum standard of living," Webb said.

Webb said that for those advocating the removal of the triple lock, and who believe merely keeping pace with CPI is an acceptable standard for pension increases, the consequences would cause "devastating damage to pensions adequacy".

"But even if we go to an earnings link, over half of the working-age population will see a drop in their standard of living at retirement," Webb explained.

"I think we've been living in something of a fool’s paradise when it comes to adequacy… when you look at state pensions and the future of the state pension alongside private pensions, we are in a very serious situation.

"You cannot just think about adequacy in private provision and say it should be increased to 12 per cent [of a minimum auto-enrolment contributions] unless you are being transparent about what you are assuming the state pension will do.

"And given the assumption that [government] are going to take their foot off the gas on the state pension, that means even more need for adequate private provision."

Webb also highlighted figures released by the Department for Work and Pensions (DWP) earlier this year, which showed projections of how people are doing relative to the Target Replacement Rate (TRR) framework and the Pensions UK's Retirement Living Standards (RLS).

For the TRR framework, Webb said the figures showed that just over 40 per cent of the working-age population - equal to around 14 or 15 million people - will fall short of their [TRR benchmark].

Meanwhile, DWP figures showed that under the Pensions UK RLS minimum standard, which estimates that a single person needs £13,400 per year in retirement, 13 per cent of working-age people are under saving.

However, Webb also highlighted that, depending on the target level, the proportion of people under saving rises to 73 per cent for a moderate RLS (£31,700 for a one-person household) and to 91 per cent for a comfortable RLS (£43,900 for a one-person household), and so argued that "more needs to be done".

Webb also suggested that these figures "understate the problem", noting that the projections are based on an assumed state pension level and that the triple lock mechanism will "be around forever".

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