The Government is changing the triple lock on the state pension, with the average earnings link set to be removed from April 2030. An ex-DWP minister has explained what the new rules will mean for pensioners' payments.
Former Liberal Democrat MP Sir Steve Webb, who helped bring in the triple lock in 2011 during the Coalition Government when he served as pensions minister, spoke to the BBC's Money Box show about how the new state pension increase rules will work.
What has been announced
Prime Minister Andy Burnham announced in his Labour Party conference speech that the Government would "adjust" the triple lock policy from April 2030. The current policy ensures that the state pension rises each April in line with the highest of either 2.5 per cent, the rise in average earnings or inflation.
Mr Burnham said the average earnings figure will be removed, with the 2.5 per cent and inflation link remaining. He assured listeners that the state pension will still "hold its value relative to earnings over time, so that pensioners will always share in the rising prosperity of the nation".
How the new rules will work
Sir Steve explained what the new policy will mean in practice: "Every year pensioners will definitely get [an increase in line with] inflation, so that's if prices go up. And if that's a very low number, they'll always get 2.5 per cent."
He also shared some rough figures about how the new price metric will work. The ex-minister said: "There's a third leg sort of lurking, which is that they will always keep the pension a certain share of the average wage. So say, in round numbers, it's 30 per cent of the average wage now, it will never dip below that.
"So as years go by, the pension will always be at least that 30 per cent. So, if people's wages are growing over time, so will the pension."
Impact on pensioners
He said that given the state pension will continue to rise pegged to these numbers, moving away from the triple lock may not be as severe as it first appears. Sir Steve said: "So it's not quite as draconian as it sounded. It will save the Government money, that's partly why they've done it, but it's not like going back to the '80s and '90s when it was just price inflation."
Despite this reassurance, he was pressed on how much less pensioners will get compared to what they would have received if the triple lock had remained in place. In response, he said: "Pensions will still go up every year, at least 2.5 per cent every year, but over the coming years by less than they would have done, and that's where these billions of pounds of savings come from.
"So, in cash terms by 2040 - so, a decade after they start the policy - pensions will be about £1,000 a year per pensioner lower than they would have been. They'll still be higher than they are now, but they won't rise by as much."
Other state pension changes
Some key changes are coming in for the state pension that are worth being aware of. The state pension age increase - the access age for the DWP benefit is currently moving up from 66 to 67. This process began in April 2026, with the state pension age moving up gradually to reach 67 by April 2028.
As announced at the Autumn Budget 2025, the Government is to bring in a policy so that people whose only income is the state pension, without extra amounts, will not have to pay income tax on their payments. The full new state pension currently pays just under £12,550 a year, almost using up the entire £12,570 personal allowance and so attracting an income tax bill. Ministers are expected to set out more details about how this will work at the Autumn Budget 2027.
