State pension triple lock guarantee to remain despite affordability concerns

The government has reaffirmed its commitment to the state pension triple lock, amid ongoing pressure to address potential affordability issues. Torsten Bell, the newly appointed pensions minister and secretary to the Treasury, insists that the triple lock guarantee—which ensures the state pension rises each year by the highest of inflation, wage growth or 2.5 per cent—will remain in place for the full parliamentary term.

Speaking in London earlier this week, Bell referred to the party manifesto, stating that the policy will continue and describing the state pension as the “bedrock” of retirement income for most pensioners. Those who reached pension age post April 2016 are now eligible for a state pension of £230.25 per week, a 4.1 per cent increase for the 2024-25 period. Projections indicate a further 5 per cent rise in April, reflecting strong wage growth and pushing the annual amount from £11973 to £12572.

The Office for Budget Responsibility estimates last year’s state pension spend at £114.1 billion, with a forecast of £149.3 billion by 2029-30. Analysis suggests that the triple lock now costs about three times more than originally projected, largely due to recent inflation and subdued earnings. By the early 2070s, state pension expenditure is expected to account for 7.7 per cent of GDP, up from 5 per cent currently, as the ratio of working adults to pensioners falls further.

Bell acknowledged longstanding debates over the policy, noting his previous work at the Resolution Foundation where he advocated for a more earnings-linked approach. Nonetheless, he emphasised the importance of maintaining pensioner incomes, particularly as those due to retire in 2050 are forecast to receive retirement incomes 8 per cent lower than today’s retirees, mainly due to the decline of defined benefit pension schemes.

Critics have called for reform to ensure long-term financial sustainability, with some think tanks suggesting the state pension age would need to rise significantly in future. However, the Institute for Fiscal Studies has indicated that removing the triple lock would have limited impact on public finances this decade, given that current spending plans already account for its cost. Sir Steve Webb, who introduced the triple lock, warned that scrapping it would cause political upheaval and only generate significant fiscal benefit over the longer term.

With an ageing population placing further strain on the public purse, the debate over the triple lock’s future is set to intensify. For now, the government has made clear that the guarantee will stand for the duration of this parliament, giving pensioners a degree of income security against a volatile economic backdrop.