Financial experts warn the state pension is under 'considerable and growing strain' as new Prime Minister Andy Burnham considers policies that could affect payments. Just a day into office, Burnham unveiled his first major fiscal policy under new Chancellor John Healey, including a VAT cut on electricity bills from October.
Triple lock commitment
Burnham has pledged to stick to the Labour Party's 2024 manifesto, which includes keeping the state pension triple lock. This ensures payments rise each April by the highest of 2.5%, average earnings growth, or inflation. Pensioners have seen record increases, including 10.1% in April 2023 and 8.5% the following year.
Charlotte Kennedy, chartered financial planner at Rathbones, said: 'It is no secret that the public finances are under considerable and growing strain, while the cost of providing the state pension continues to balloon.'
Potential pension age increase
One way to keep the policy affordable is by raising the state pension age. The state pension age is currently rising from 66 to 67 between April 2026 and April 2028, with a further rise to 68 scheduled between 2044 and 2046. However, a 2023 independent review suggested bringing this forward to 2041-2043, while the Office for Budget Responsibility recommended moving it to 2037.
Kennedy noted: 'Speculation around potential changes to the pension system has intensified, including suggestions that the state pension age could increase more rapidly as part of the ongoing statutory review.' Labour announced another review of the state pension age in 2025, with an independent review underway that ministers will consider.
