Financial News

Expat Voters Get Straight Choice – To Triple Lock Or Not

The Conservatives have pledged to ditch the state pension triple lock if they win Election 2017.

Theresa May also has plans to axe winter fuel benefit payments for the better off by means-testing for the add-on that is worth between £100 and £300 for pensioners.

The moves make  voting a straight choice.

They can either go for May’s plans to dock state pensions by removing the 2.5% minimum guaranteed increase to a double lock and face rises linked to wages and inflation with many, especially in France, losing the winter fuel payment.

Or with Jeremy Corbyn’s Labour which promises to keep the triple lock.

The argument against the triple lock is the country cannot afford to boost state pensions by the guaranteed minimum rise.

Triple trouble

Introduced by Chancellor George Osborne in 2010, the state pension pays £106.80 a year more under the triple lock than if the wages/inflation link had been in place.

He and Prime Minister David Cameron set the triple lock to run until 2020, when MPs would review the terms. May will lift the pledge instead of putting the triple lock to review.

If the state pension had grown in line with inflation during that time, the payout would be £5,994 a year instead of £6,360.

An independent review of the state pension ordered by the government reported in March.

The report recommended scrapping the triple lock as ‘too expensive’. Critics also claim the pension guarantee is unfair to workers who fund the scheme.

Pension for expats

The review pointed out that the triple lock cost the country 5.2% of GDP last year and would increase to 6.7% by 2066. Cancelling the triple lock would bring pension costs down to 5.9%.

Government figures estimate the triple lock has cost the country an extra £6 billion, compared to what would have been paid if the pension was inflation-linked.

So far, the Tories have been unclear about reinstating the triple lock for expats.

Cost of living increases are only paid in countries with a reciprocal social benefits agreement with the UK.

Elsewhere the state pension is set at the rate of the first payment.

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