Retirement experts have warned that state pensioners face "greater strain" on their quality of life as the triple lock is removed. Concerns have been raised about moving to a less generous state pension increase, as the Department for Work and Pensions (DWP) benefit is already "well short of providing a good standard of retirement".
Prime Minister Andy Burnham announced recently that from 2029, the triple lock will be changed. Under the current rules, the state pension increases each April in line with whichever is highest of three measures: the rise in average earnings, the rate of inflation or 2.5 per cent.
Triple Lock Changes
But in a few years' time, the earnings measure will be scrapped, although Labour says that the state pension will still keep track with the increase in earnings over time. The state pension is expected to increase 3.5 per cent, in line with the September inflation measure announced recently.
Bob Tronson, head of pensions at InvestEngine, said that the earnings measure has had a "significant impact" in delivering substantial increases to the state pension. He said: "Since the triple lock was introduced, the earnings figure has determined the majority of increases to the basic state pension and two of the three largest increases, including a huge 8.5 per cent rise in 2024."
'Greater Strain'
Given this importance of the average wages hike metric historically, losing out on it going forward is a worrying sign for pensioners. Mr Tronson said: "Removing the triple lock puts greater strain on people's quality of life in retirement. Had the Government excluded the earnings metric from pension calculations and instead settled on a double lock in 2010, someone receiving the full basic state pension would be £560 a year worse off today, while the full new state pension would be £688 lower."
He also shared some thoughts for those planning for their retirement: "The state pension already falls well short of providing a good standard of retirement on its own. Moving to a double lock will make it even more important for those still in work to start building their own retirement savings early, whether through a workplace pension or self-invested personal pension (SIPP), rather than relying on the state pension alone."
Other Changes to the State Pension
State pensioners may want to make a note of some important changes to the state pension rules that are coming in imminently:
- State pension age increase - The age you can access your state pension is gradually moving up from 66 to 67. This is happening in stages, with the process starting back in April 2026 and finishing by April 2028. Also in April 2028, the age you can access your private pensions will move up from the current 55 to 57.
- New tax exemption - The Government is bringing in a new policy so that people whose only income is the state pension, without any additional amounts through the scheme, will not pay income tax on their payments. Ministers are expected to provide more details about how this will work at the Autumn Budget, on Wednesday, October 28.
The state pension is expected to increase 3.5 per cent in line with the September inflation measure, and the Autumn Budget will provide further details on the new tax exemption.
