The Organisation for Economic Co-operation and Development (OECD) has called on the UK government to scrap the state pension triple lock, warning that the policy is 'unusually generous' and risks leading to further increases in the state pension age. In its latest Economic Survey of the UK, the OECD argues that the current mechanism creates 'sharp and unpredictable' rises in pension spending and adds to fiscal uncertainty.
The triple lock, introduced in 2011, ensures state pensions increase each year by the highest of wage growth, inflation, or 2.5%. This year, the new state pension rose by £575 to £12,548, in line with 4.8% wage growth. The OECD warns that during periods of macroeconomic volatility, such as the 2021-2023 energy crisis, the policy can lead to significant and unpredictable expenditure increases.
The organisation urges the government to prepare a medium-term reform of the triple lock, suggesting alternative models such as indexing pensions to an average of wage growth and inflation, or adopting a system like Australia's, which combines inflation protection with periodic reviews against an earnings benchmark. The OECD stresses that without reform, the government may face further rises in the state pension age, tax increases, or cuts to public spending.
The Labour Party, which included a commitment to maintain the triple lock in its 2024 election manifesto, has so far indicated it will keep the policy for the duration of this Parliament. Andy Burnham, a potential successor to Sir Keir Starmer, has also suggested he would adhere to the manifesto pledge when questioned on the issue.
