An industry think tank has said that replacing the pensions triple lock with “earnings smoothing mechanism” could save up to £15bn ($19.56bn, €16.59bn) from the covid-19 bill.

But the Pensions Policy Institute (PPI) added that this would reduce average state pension income by 2% from 2021.

The triple lock means the state pension increases by the highest of the increase in average earnings, inflation or 2.5%.

This comes as rumours continue over the future of the pensions triple-lock, with chancellor Rishi Sunak reportedly looking to scrap it to fund the coronavirus bill.

Idea The PPI said the UK could move to earnings smoothing mechanism to inflate the state pension for earnings over 2020 and 2021, before returning to a triple or double lock in 2022.

This would mean that a spike in earnings inflation in 2021 would be less likely to result in a dramatic increase in the cost of the state pension, and could save around £15bn.

Under the triple lock, average pensioner incomes could reach up to 31% of national average earnings by 2040.

This compares to up to 30% under a double lock and up to 29% under smoothing for one year. Daniela Silcock, head of policy research at the PPI, said: “The UK government is reportedly considering replacing the State Pension inflationary mechanism, the triple lock in order to reduce government expenditure and make the covid-19 Bill more affordable.

News reports originally indicated that the government was considering replacing the triple lock with a double lock. “However, it has become increasingly clear to economists that changes in employment, arising from covid-19 are likely to result in spikes in earnings inflation in 2021, which would mean that a double lock would not save any money on the state pension bill in that year.”

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