The government should drop the 'triple lock' for state pensions as it will become unaffordable, former pensions minister Baroness Ros Altmann has said.
Instead, the government should pursue a ‘double lock' policy, based on the rise in average earnings or inflation, in order to save £6bn a year on long-term costs.
The ‘triple lock' currently ensures state pensions rise with inflation, average earnings, or by 2.5%, whichever is the highest, until at least 2020.
However, Altmann said the guarantee may not always be proportionate, and could add around 10% to the cost of state pensions by 2040, with higher costs if the UK experiences deflation.
She added the policy's success since 2010 meant pensioner poverty has reduced and so the above-inflation increase should be abolished.
She said: "If pensioner household incomes have already reached levels that mean they are no worse of, on average, than younger families, then it is harder to justify continuing to boost them even further beyond this level.
"If money is saved using a double lock, this could offset the need to keep increasing state pension age. Reducing the annual uprating can save more money than increasing the state pension age itself."
In the 2014/15 financial year, only 13% of pensioners were recorded as living in poverty, down from 30% in 2002/03, according to government figures released in June.
Industry figures warned it would not be wise for the government to change the policy before 2020, with additional reviews before altering the policy after that.
The Pensions and Lifetime Savings Association (PLSA) director of external affairs Graham Vidler said the call demonstrated why pension policy needs to be considered by an independent commission.
He said: "Any changes over the lifetime of this parliament shouldn't be considered. But beyond this parliament, you need to look at the interrelationship of the triple lock with the state pension age and the adequacy of private pension savings.
"This is another thing that underpins the case for an independent commission to look at the totality of these issues, because they are intimately related. We believe the government should establish a permanent retirement savings commission, which will advise the government each year on progress towards its policy targets."
Aegon head of pensions Kate Smith said the government should only undertake reviews into the state pension's affordability once every five years.
"The state pension is the bedrock of many people's retirement incomes and to give pensioners certainty, government should not make mid-term changes to commitments such as the triple lock. We welcome the government's confirmation it has no plans to remove the triple lock ahead of 2020.
"Nine years of ‘triple lock catch up' by 2020 will be a very valuable benefit to pensioners, but clearly, the more its value, the greater its cost to the government and taxpayers.
"People need trust in state pensions so they can determine how much they need to save in addition to meet their retirement aspirations. It's important state pension policy is fixed for at least five years, and in some regards for far longer, giving certainty to pensioners and savers alike."
Responding to the call, Downing Street said there were no plans to review the policy.
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