Those who wonder about the economics of the state pension should note that the triple lock applies to all state pensioners, regardless of income or wealth. This promises that their pension will increase every year in line with inflation or with average wage increases, whichever is the higher. The triple lock guarantees that it will rise by at least 2.5% yearly if neither of the other two other measures reaches that level.
A note from my friend illustrates one of the consequences of this promise. He reports that his state pension, plus his winter fuel allowance, plus his Christmas bonus, came to £5,420 a few years back. Since this could buy him a bottle of supermarket brand champagne every day at about £14.85, he dubbed it his champagne fund.
He wrote following the latest increase to report that the total per annum now going into his champagne fund comes to nearly £8,300, or £22.74 per day. Whereas before he could only afford a bottle of Tesco’s or Sainsbury’s house champagne every day, he can now manage a decent named brand. Indeed, he says, if he goes slumming on Sundays with a bottle of Sainsbury’s best champagne, on each of the other 6 days of the week he can afford a bottle of Veuve Cliquot.
I should add that he is a multi-millionaire with a flat in London and a house in the country. As the outrage levels rise, let me point out that he gives generously to charity, and justifies keeping the money because he thinks he is a better judge of worthy recipients than the state is. I do not begrudge him his champagne fund, and I note that he occasionally thanks me and other taxpayers for our generosity. But I cannot help wondering if the founders of our welfare state intended this consequence when they first established it?