The Tony Blair Institute (TBI) has called on the Labour government to abandon the pension triple lock, labelling it "unaffordable" as public finances come under increasing strain. The former prime minister's thinktank argues that a comprehensive overhaul of the UK's pension system is inevitable.
Triple Lock Under Fire
The triple lock guarantees that the basic and new state pensions increase each April by the highest of inflation, average wage growth, or 2.5%. Introduced by George Osborne in 2010 under the Conservative-Liberal Democrat coalition, the policy has significantly boosted annual government expenditure, especially following inflation spikes from the Covid pandemic and the Ukraine war.
According to TBI, the policy is no longer sustainable due to Britain's rapidly ageing population. The number of pensioners is projected to rise from 12.6 million today to nearly 19 million by 2070, which would increase state pension spending from 5% to 7.8% of GDP—an extra £85 billion annually in today's money. "That would mean higher taxes, deeper pressure on other public services, or both," the thinktank warned.
Call for Cross-Party Pact
The TBI suggests that political parties should agree before the next general election to phase out the triple lock. It argues that change is "unavoidable" to contain pension spending. The report also proposes replacing the current state pension with a new "lifespan fund," where individuals contribute to a notional fund providing up to 20 years of support. This would allow people to access some entitlement early for unemployment, retraining, or caring, with safeguards, and would personalise the state pension age.
Thomas Smith, TBI's director of economic policy, stated: "Britain's state pension system was built for a different era. We can't keep pouring money into a system that is increasingly unaffordable. Pension spending must be contained, and that means the triple lock cannot continue after the next election."
Government Response
Chancellor Rachel Reeves has previously affirmed the government's commitment to the triple lock, saying, "We made a commitment in our manifesto to the triple lock, and we're not changing that." However, with rising inflation due to global energy prices and the Middle East conflict, pressure on public spending is mounting. The Department for Work and Pensions stated that supporting pensioners remains a priority and noted that the Pensions Commission is examining ways to ensure secure retirements for future pensioners.
The TBI's report underscores the urgent need for reform, warning that without action, the UK faces higher taxes or cuts to other public services. The thinktank's proposal aims to create a fairer, more flexible system suited to modern lifestyles.
