The Work and Pension Committee’s recommended replacing the current system in its Intergenerational Fairness report, released yesterday.
MPs proposed a “smoothed earnings link” for the new state pension, with a benchmark proportion of average earnings below which it could not fall.
Tom Selby, senior analyst at AJ Bell, said: "Margaret Thatcher's decision to scrap the earnings link for the state pension in 1980 was seen by many as an attack on pensioners. The triple-lock has at least partly restored some of the value that was lost during that 30 year period. However, it was never meant to be a permanent measure and costs the Exchequer billions. The Government will be wary about hitting pensioners ahead of the 2020 election - and breaking its manifesto promise in the process - but beyond that the triple-lock's future looks bleak."
Adrian Walker, Old Mutual Wealth retirement expert, said: “It is logical that the triple lock cannot remain in place forever, because over time pension benefits would grow and grow without ever levelling out. That cannot be sustained indefinitely.
“Nonetheless, it would be a surprise if the policy was reversed just a few years after it was first introduced. And government will not undo the measures without careful thought, since it risks aggravating retired voters.”
Although he thinks it is inevitable the promise will be reeled-in at some point, he said: “But to see MPs so forcefully recommend it be scrapped will raise real concerns that could happen sooner rather than later.”
Ex-Pensions Minister Baroness Ros Altmann claimed that the triple lock had been used by politicians to “cover up pension policy failures”. The 2.5% makes no economic or social sense, she said.
She called for a change to the system to make it a double lock instead, soon after leaving office in the summer.
Explaining how this would work, she said: “A double lock would guarantee state pensions would not fall behind the cost of living or the rise in average earnings, and would protect pensioners relative the rest of the economy and society. This would give pensioners better protection than other groups, which is right, but it would not 'bake in' the 2.5% figure that is not related to any economic or societal yardstick.
“The double lock does not preclude higher rises if the Government of the day wants to offer more in any particular future year. But those rises can be decided at the time, rather than committing to an arbitrary number that has no relation to the economy or society.”
She said: “A fair, basic state pension and encouragement of private saving is the best way to manage state pensions for the long-term. Moving to a double lock would help set a stable and fairer base for the long-term too.”
Frank Field MP, Chair of the Committee, said: “Great strides have been made against the scourge of pensioner poverty and the new state pension is at a level to provide an effective minimum income and encourage personal saving. It is time for the triple lock to be shelved. The system we propose protects pensioners and allows them to share the proceeds of future good times, but at the same time is inter-generationally fair. We call on all parties to get behind it.”