Triple lock guarantee for pensioners should be abandoned to ensure that economic recovery from coronavirus crisis is fair to working-age households

Society is rightly making sacrifices to protect its elderly now, says thinktank, creating a clear case for 'intergenerational reciprocation' in years ahead

The triple lock guarantee for pensioners should be abandoned to ensure that economic recovery from the coronavirus (COVID-19) crisis is fair to working-age households, the Social Market Foundation (SMF) has argued.

In Intergenerational fairness in the coronavirus economy, published today, the SMF highlights that lockdown policies during the coronavirus crisis have rightly been deployed to protect the lives and wellbeing of those most vulnerable to the virus, a group that includes older people. However, it also says that - 

• the economic cost of tackling coronavirus will fall heavily on those of working age, especially in terms of redundancies and lost income;
• public sector net borrowing could rise above £200bn per year - higher than that seen in the financial crisis - raising the prospect of 'Austerity Round Two', with years of tax rises and spending cuts as we emerge from the crisis;
• unlike 'Austerity Round One', where the working-age population bore the brunt of cuts in spending, especially via the welfare budget, the fiscal costs of this crisis must be fair across all age groups; and
• the current economic sacrifice is the right thing to do, but older generations must uphold their part of the contract by bearing a fair proportion of future tax rises and welfare reforms.

Recommending that the triple lock should be replaced with a 'double lock' tying increases to earnings or inflation (whichever is higher) - meaning pensions would still rise but less quickly - the SMF's research director Scott Corfe said - 

'Quite rightly, society is making sacrifices to protect its elderly right now. There is a clear case for intergenerational reciprocation when it comes to meeting the fiscal costs of the crisis in the years ahead.

'The crisis has emphasised our obligations to other generations, even in the face of personal sacrifice.  This spirit must be maintained when the dust settles – with the economic costs of responding to the crisis shared fairly across the generations.'

For more information, see Scrap pensions triple lock to help pay for lockdown from smf.co.uk