The triple lock has been slammed as a “terribly designed policy that has proven to be far more expensive than originally planned”
Should the UK Government scrap triple lock? (Image: Getty)
The State Pension bill is spiralling, with the UK Government set to spend £146.1billion in payments in 2025 to 2026. This is only going to rise thanks to the triple lock, which guarantees that the State Pension increases every April by either inflation, earnings growth, or 2.5% – whichever is highest.
The Triple lock has pushed up spending on the State Pension by £12billion more per year by 2025–26, compared to if it had been uprated in line with average earnings since 2011, according to the Office for Budget Responsibility (OBR). Officials have warned something must give. Left-leaning think tank, The Resolution Foundation, said axing the policy would save £650million a year by the end of this parliament.
Chief executive Ruth Curtice called the triple lock a “terribly designed policy that has proven to be far more expensive than originally planned” that risked causing “further economic harm”.
So what do you think? Should the State Pension triple lock be scrapped? Vote in our poll and join the discussion in the comments below.
In April, the full new State Pension increased to £12,547.60 a year, up from £11,973, marking a £574.60 annual increase. This brought pensioners closer than ever to paying tax on their pension, with the annual tax-free personal allowance set at £12,570.
When the rate was confirmed, Rachel Vahey, head of public policy at AJ Bell, warned this trajectory presented a “dilemma” for Rachel Reeves‘ office, who may have to decide between enraging pensioners by scrapping commitments to triple lock, or creating further financial burden by increasing the personal allowance.
“While pensioners will be in a mood to celebrate, this sizeable uplift to the state pension is likely to engorge projections of future government spending and presents a dilemma for the Treasury,” she said.
“Removing the freeze on the personal allowance would come at significant cost to the Treasury at a time when the chancellor’s fiscal headroom is already strained at best, while an overhaul of the triple lock would come with huge political risk before the next general election.”
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, warned the huge bill could postpone retirement for future generations, since it will be too expensive to maintain the payments for so many years.
She said: “Recent data shows the number of people living until their nineties – and even longer – has soared and the government needs to consider how to balance the costs of state pension with the burgeoning pensioner population.”
She warned “we could see further increases to state pension age put on the table” after the review into State Pension Age is finalised, currently being led by Dr Suzy Morrissey.
Speaking about triple lock, she added: “The government had pledged to keep it in place for the remainder of this Parliament but longer term we could see changes on the horizon.”