Prime Minister Andy Burnham has announced a major change to the State Pension triple lock system in order to pay for social care reforms. The announcement came during his first speech as Labour leader at the party's conference in Liverpool on Tuesday afternoon (September 29).
During the speech, he promised to put the country on a new path and pledged to tackle the issues politicians "usually avoid". In the lead up to the conference, there had been speculation on whether he would scrap or alter the triple lock to fund his plans for social care.
Triple lock adjustment from 2030
Mr Burnham announced he will "adjust" the triple lock from 2030, removing the link to average earnings to pay for social care reform. This means the State Pension will continue to rise each year by whichever is highest out of CPI inflation, or a minimum of 2.5%, which will generate "significant savings" and remove the link to average earnings.
Mr Burnham said this will ensure pensions will hold their value relative to earnings over time while generating savings that will be used to pay for a new National Care Service that will be "free at the point of use" and impose no charges on the basic State Pension.
Impact on pensioners
These changes will be introduced from the next Parliament, meaning that the State Pension triple lock will remain in place until April 2030. At the current rate it is increasing, the State Pension is set to rise by over £2,000 a year - which will put it at its highest ever by 2030.
Addressing the Labour Party conference in Liverpool, he also said low-income pensioners would not have to pay income tax during this Parliament. Announcing the policies, he also paid tribute to his father Roy, who was in a care home before his death.
Mr Burnham said: "I won’t pretend some of this won’t be difficult. I accept I may pay a political price. But someone has to go through the pain barrier and rip the plaster off. It’s the leadership I promised you when I asked to be your leader."
"I’ll be honest, we promised in our manifesto to keep the triple lock unchanged throughout this Parliament. I will honour that promise. I will honour that promise and I will do more. That will take the state pension to a record high."
"From there, in April 2030, we will adjust it. The state pension will continue to rise every year at least by prices or 2.5%. And it will hold its value relative to earnings over time so that pensioners will always share in the rising prosperity of the nation."
"But this change will generate significant savings which we will use to build up our National Care Service. Some may not realise it but older people with nothing more than the state pension, or only a little more, can find themselves paying care charges today from that small income. Under my plan, this will no longer happen."
