The triple lock mechanism used to uplift state pensions has attracted scrutiny amid rumours about how possible reforms to social care in England might be financed. While any alterations would not occur before the next general election, ministers have declined to confirm whether Labour's pledge to the triple lock will feature in the next manifesto, sparking conjecture that an eventual shift to a less generous arrangement could be under consideration.
What is the triple lock?
State pension rises, which occur in April each year, are determined by the triple lock mechanism. Under the triple lock guarantee, the state pension increases in line with whichever is the highest of three figures.
These are total earnings growth in the year from May to July of the previous year, CPI (Consumer Prices Index) inflation in September of the previous year, or 2.5%.
How do pensioners benefit?
The mechanism helps boost pensioners' incomes to keep pace with the working population and living costs. The cost-of-living crisis, with escalating bills, has affected many households in recent years and many pensioners rely on fixed incomes, which may offer little flexibility in their budgets.
The state pension can prove a particularly crucial safety net for pensioners living on more modest incomes. Research from wealth manager Quilter reveals that for retirees aged 65 to 79 with below-average retirement incomes of £25,000 or less, the state pension delivers 57% of retirement income, while for those aged over 80 with below-average retirement incomes, it represents 54%. The state pension makes up nearly a quarter (24%) of income across all retirees, the analysis found.
Why has the triple lock proved controversial?
More broadly, the triple lock policy has formed part of a wider discussion surrounding generational fairness and cost pressures facing younger generations. Individuals relying entirely on the full new state pension currently appear set to exceed the personal tax allowance next year, as recent Office for National Statistics (ONS) data showed total wage growth, including bonuses, reached 3.9% in the quarter to July.
While awaiting confirmation, and with not all elements of the triple lock calculation yet finalised, this suggests the full new state pension could surpass £13,000 next year. The personal tax allowance has remained frozen at £12,570 since 2021. However, numerous pensioners do not qualify for the full state pension.
The Government has stated previously that pensioners who rely entirely on the new state pension, with no private pension, or the old basic pension, with no increments, will not be required to pay tax. Additional details are anticipated to be outlined in the Budget.
What is the cost of the state pension?
The Institute for Fiscal Studies (IFS) has previously indicated that public expenditure on the state pension in 2026–27 is forecast to reach approximately £154 billion, and that the triple lock has boosted annual state pension spending by around £16 billion, compared with uprating in line with average earnings growth since 2010.
Recent comments on the triple lock
Baroness Altmann, a former pensions minister, recently called for a cross-party review "to decide how best to uprate state pensions without political point scoring". The leader of trade union Unite declared that reforming the pensions triple lock to fund social care would be "morally wrong". Sharon Graham told BBC Radio 4's Today programme: "Instead of going and trying to pick the pocket of pensioners, we need to move over to the other side of the equation and look at things like wealth taxes, way before we try to stop something like the triple lock."
What about future pensioners?
Today's working-age population are tomorrow's retirees – and concerns have mounted in recent years that many are heading towards a retirement income shortfall – potentially leaving some even more dependent on the state pension. In May, the Pensions Commission revealed that around 15 million people are believed to be failing to save sufficiently for their retirement.
Women, those on low and middle incomes, and self-employed workers are amongst those who could face particular vulnerability, the commission has stated, cautioning that without intervention the figure of people under-saving for retirement could climb to 19 million.
Defined benefit (DB) pensions which guarantee a retirement income have become increasingly scarce, and while automatic enrolment has drawn millions into workplace pension schemes, substantial numbers are believed to be setting aside insufficient funds. Certain groups, including the self-employed, fall outside the scope of auto-enrolment provisions.
