The UK spends around £154 billion a year on state pensions. The accumulated additional cost attributed to the triple lock is estimated at around £16 billion. That money has helped protect pensioners' incomes, including those of the many people who depend almost entirely on the state pension.
There is, however, another pension subsidy that receives far less attention: tax relief on private pensions. The total cost of private pension tax reliefs is around £83.9 billion a year, with 71% of that tax relief going to higher and additional-rate taxpayers. Most strikingly, the cost of higher-rate pension tax relief, over and above the basic rate everyone can enjoy, is around £15 billion a year, which is remarkably close to the £16 billion cost attributed to the pension triple lock. So why is the political debate focused on restraining the incomes of pensioners rather than on reducing tax subsidies for people already able to accumulate substantial private wealth?
This isn’t fundamentally an affordability question. It is about inequality, political priorities and whose interests government chooses to protect.
I think the triple lock should stay, and higher-rate pension tax relief should go. You may, of course, disagree.
