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Raising the state pension by inflation could save \u00a319 billion a year by 2035, according to research by a think tank which is calling for the triple lock to be scrapped.<\/p>\n
Since 2011 the state pension has risen by the highest of three measures \u2013 inflation, wage growth, or 2.5%. <\/p>\n
This year the full rate of the new state pension will increase by 4.8% in line with the increase in average earnings.<\/p>\n
Pensioners are\u00a0\u00a31,300 a year better off\u00a0than they would have been if the state pension had risen only in line with inflation over the past decade.<\/p>\n
Critics say that it has become unaffordable and is forecast to be \u00a310bn more expensive a year than forecast, based on Institute of Fiscal Studies (IFS) figures. There are concerns it could force ministers to raise the state pension age further and faster.<\/p>\n
There is also concern that it exposes the Treasury to random fluctuations in any of the factors used to fix the annual increase.<\/p>\n
The Intergenerational Foundation, which promotes economic fairness, is calling for the state pension to increase with inflation until 2030-31 then by the average of inflation and wage growth.<\/p>\n
It calculates that this would save \u00a319bn a year by 2035, \u00a328.5bn a year by 2040 and \u00a338bn a year by 2045. These avings should be directed to poorer pensioners through a new low-income pension supplement worth \u00a330 a week (\u00a31,560 a year), says the foundation.<\/p>\n
Conor Nakkan from the foundation said: \u201cThe triple lock may have been introduced with good intentions but it has become an expensive and poorly targeted policy.<\/p>\n
\u201cIt now delivers large increases to all pensioners, including millions who are already well-off, while younger generations face stagnant living standards, high housing costs and a growing tax burden.\u201d<\/p>\n
The state pension is expected to cost \u00a3146 billion (about 5 per cent of GDP) this year, sharply up on the \u00a386bn cost in 2005 when it represented 4.14% of GDP). <\/p>\n
The Tony Blair Institute, another think tank, has estimated that it could\u00a0rise as high as 7.8 per cent of GDP\u00a0by 2070 if the triple lock remains.<\/p>\n
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