Prime Minister Andy Burnham has announced changes to the triple lock, which will take effect from 2030. Under the current policy, state pension payments increase each April in line with the highest of 2.5 per cent, the rise in average earnings, or inflation. The adjustment will remove the average earnings metric, though Labour has assured the state pension will still keep track with the increase in earnings over time.
Expert urges wider thinking on pension changes
The changes to the state pension rules may raise questions about whether the scheme will become less generous. Catherine Foot, director of the Standard Life Centre for the Future of Retirement, has encouraged people to think more widely about the system.
Ms Foot said: "Changes to the triple lock are a reminder to younger generations that the pensions system could look quite different by the time they retire. While the state pension will remain a vital foundation for retirement, the new rules mean it will no longer be designed to grow faster than average earnings each year."
She added: "Any debate about the triple lock should therefore consider private pension saving and the state pension age alongside it, rather than treating each as a separate question."
State pension age rising now
The state pension age is currently moving upwards, with the access age going up from 66 to 67 in stages between April 2026 and April 2028. Ms Foot urged people planning for retirement to build up their own private pensions rather than relying on the state pension.
Ms Foot said: "The state pension age is already set to rise to 68 in the 2040s." She said further increases are also "possible". Legislation is in place for the state pension age to go up from 67 to 68 between 2044 and 2046, and there has been discussion of hiking the retirement age even further beyond this.
Means-tested payments question
As the costs of the state pension continue to rise, Ms Foot was asked whether the Government could eventually make the benefit means-tested. She said: "There's no reason to assume the state pension will disappear or become means-tested. It's important we don't undermine confidence in a system that millions of people depend on."
She added: "However, with several decades ahead of them before retirement, it's important for younger workers to recognise that the rules may change and avoid assuming that automatic enrolment alone means they are saving enough."
Building a stronger position
Ms Foot urged people to pay into their workplace pensions and to regularly check how their retirement pots are growing to help put themselves in a "stronger position". She said: "Even relatively small amounts paid in early have longer to benefit from investment growth, while moments such as a pay rise or promotion can provide a useful opportunity to review contributions."
She added: "At the same time, the Government has a responsibility to ensure the state pension remains a reliable foundation that future generations can trust."
