The Government should scrap the triple lock on pensions, according to a new report from former Prime Minister Sir Tony Blair's think tank. The Tony Blair Institute (TBI) argues that the state pension is 'outdated, increasingly unaffordable, and too rigid for the way people live and work.'
Proposed Reforms to Replace Triple Lock
The TBI urges the Government to replace the triple lock with a new pensions system that would enable people to access funds earlier in life—for retraining, career changes, or caring roles. The think tank proposes a 'lifespan fund' that would allow individuals to build entitlement through activities including work, caring, and study.
Annual contributions to this notional fund would provide up to 20 years of state-backed support at the level of today's state pension. People could access some of that entitlement during their working lives at critical periods, such as unemployment, retraining, or caring. Those who access support early would be automatically enrolled into higher National Insurance contributions when they return to work to rebuild what they had drawn down.
Scrapping Triple Lock as First Step
Sir Tony's think tank argues that the first step to reforming the pensions system must be to scrap the triple lock to prevent the state pension rising faster than earnings growth. Tom Smith, director of economic policy at the TBI, said: '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.'
The triple lock dictates that pensions must rise every April by the highest of three metrics: earnings growth, inflation as measured by the Consumer Prices Index (CPI), or 2.5 per cent. There are currently 12.6 million pensioners in Britain, a figure set to rise to almost 19 million by 2070. On current projections, the state pension will cost an extra £85 billion a year by 2070—more than the annual defence budget.
Financial Implications and Reactions
The TBI warns that without reform, the increased cost of the state pension will 'steadily squeeze out other spending priorities or push taxes higher.' Its proposed reforms would hold long-term pension spending at the current level of about 5.5 per cent of GDP, saving approximately £66 billion a year in additional costs by 2070.
However, Caroline Abrahams, charity director at Age UK, said the triple lock should be retained into the next parliament as it has helped improve the living standards of some of the poorest pensioners. She added: 'We continue to hear from older people who are struggling financially, and the extra money the triple lock delivers makes a meaningful difference to many lives.'
A Department for Work and Pensions (DWP) spokesman said: 'Supporting pensioners is a priority and our commitment to the triple lock for the rest of this Parliament means millions of pensioners will see their yearly state pension rise by up to £2,100.'
