Inflation proof pensions are hardly a revolutionary idea. Most Defined Benefit Scheme workplace pensions give annual increases linked to an inflation index – usually CPI or RPI. The problem is that these general indices do not in any way reflect Pensioner inflation – nor does the annual increase in earnings nor 2.5%. The triple lock is a lottery and one that guarantees that in real terms Pensioners will get poorer every year.
Pensioner inflation is different from overall inflation because Pensioner lifestyles and spending patterns are different. Many older pensioners do not have a mortgage and so the housing cost element of CPI is inappropriate. The basket of goods/services in the CPI is also very different from the real basket of pensioners. Utilities costs (electricity and gas) form a considerably higher percentage of a pensioners expenditure than that of a working family.
To maintain the value of the State pension (and workplace pensions for that matter) a new approach is nodded. Annual increments need to be linked to a Pensioner expenditure Index which accurately mirrors what pensioners actually spend their pensions on. Such an index does actually exist but nobody talks about it. They should. The Triple Lock is characterised as being generous to pensioners. It is nothing of the sort.