Pension triple lock fury amid new calls for it to be ditched – ‘Needs to go!’ | Personal Finance | Finance
‘Needs to go!’ Economists suggest triple lock ‘replacement’ in betrayal of pensioners (Image: Getty)
Economists have proposed replacing the state pension triple lock following a new report forecasting a significant increase in the policy’s cost over the next five years. The Office for Budget Responsibility (OBR) – the Government’s official forecaster – released data on Tuesday indicating the annual cost of enforcing the triple lock could reach £15.5billion by 2030.
According to the OBR, this increase works out to be three times higher than its original estimate. The triple lock, which came into effect in 2011, enables the state pension to rise every year in line with whichever is highest out of inflation, wage increases or 2.5%. According to the OBR, this policy, combined with the growing number of people aged above state pension age, means the cost of the benefit has increased “steadily” over the past eight decades. Previously accounting for around 2% of the UK economy, it now accounts for around 5% of it. By the early 2070s, it is forecast to increase to 7.7% of the economy.
The cost of the state pension is expected to rise substantially by the end of the decade (Image: Getty)
Slamming the report findings, Bloomberg reporter John Stepek wrote on social media platform X: “Triple lock needs to go. An adult Parliament with a landslide majority and this kind of evidence to back the point would grasp this nettle.”
Suggesting an alternative measure, economist Ben Ramanauskas wrote on X: “Triple Lock needs to be replaced with a single lock indexing the State Pension to average earnings growth. It will be far more sustainable and give pensioners more of a stake in productivity gains.”
Mr Ramanauskas added: “A lot of people asking why earnings rather than inflation. It’s because inflation has been unstable and has driven the high increase. Earnings because it means pensioners are more less likely to oppose planning requests as this increases productivity and wages (so they’ll be better off).” (SIC)
However, the Government has said it was “committed” to the current policy. Responding to the report, a Treasury spokesperson said: “We are committed to supporting pensioners and giving them the dignity and security they deserve in retirement.”
The OBR said the UK’s public finances were in a “relatively vulnerable position” due to recent Government U-turns on planned spending cuts, such as those of the winter fuel payment and Welfare Bill reforms.
It said: “Efforts to put the UK’s public finances on a more sustainable footing have met with only limited and temporary success in recent years in the aftermath of the shocks, debt has also continued to rise, and borrowing remained elevated because governments have reversed plans to consolidate the public finances.
Rachel Reeves has said the triple lock will remain in place until the end of the current parliament (Image: Getty)
“Planned tax rises have been reversed, and, more significantly, planned spending reductions have been abandoned.”
When asked whether the Government was not listening to the OBR’s “alarm bells,” a Downing Street spokesperson said: “No, I don’t accept that. What we recognise is that the public finances need to be brought back under control.
“We’ve had a decade of the UK being exposed to global risks more and more and to interest rate fluctuations, and that is why we have non-negotiable fiscal rules, and that is our focus.”
Chancellor Rachel Reeves has said the triple lock will remain in place until the end of the current Parliament. However, debate on the policy’s sustainability due to an ageing population has ramped up.
The Institute for Fiscal Studies (IFS) suggested last week that the triple lock should be scrapped in a wider overhaul of pensions. It said it should rise in line with prices, but the cost should be linked to a target level of economy-wide average earnings.
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Research carried out on behalf of asset management firm Hagreaves Lansdown showed only 17% of people believe the triple lock will still be in place as we know it by the time they retire – this falls to just 11% of 35–54-year-olds. Around 15% think the state pension will instead be means-tested in some way.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said: “The state pension forms the very foundation of our retirement saving, and yet almost half of us don’t know if it will still exist by the time we retire. This sense of uncertainty has major impacts on our retirement planning.
“The long-term future of the state pension needs to be a major part of the government’s pension review. The second phase on adequacy is due to launch in the very near future, and the central role the state pension plays in helping people meet their income needs means it needs to be included. Pensions are a long-term game, and people need to be able to plan with a degree of certainty if they are to build up a decent retirement income.”
What are the current state pension rates 2025/26?
People who receive the full ‘basic’ state pension receive £176.45 per week (£9,175.40 per year).
Those who receive the full new state pension receive £230.25 per week (£11,976 per year).
Who qualifies for the state pension?
The basic state pension is paid to:
- Men born before April 6, 1951
- Women born before April 6, 1953.
The new state pension is paid to:
- Men born on or after April 6, 1951
- Women born on or after April 6, 1953.
To receive any rate of state pension, people must have at least 10 qualifying years on their National Insurance record. The number of qualifying years on this record determines how much state pension a person will receive, but usually, to get the full rate, a person should have at least 35.
People may be able to boost their state pension payment rates if they find they are missing “qualifying years” in their National Insurance records. These are accumulated through active employment or by receiving NI credits. NI credits are granted during periods of unemployment, illness, or while fulfilling parental or caregiving responsibilities.
Those who have gaps, which may have occurred when credits weren’t claimed, can increase their state pension by purchasing additional NI years.
HM Revenue and Customs (HMRC) and the DWP offer an online state pension forecast service to help people calculate if they’ll benefit from making voluntary contributions.
