For a policy so routinely criticised, the state pension ‘triple lock’ has an uncanny knack for political survival.
For the untutored, or for those living under a rock these past 15 years, the triple lock guarantees that the state pension will rise each year in line with either inflation, wage increases or 2.5% ─ whichever is the highest.
Chancellor Rachel Reeves used her first Budget to recommit to it yet again, with a 4.8% increase from April that nudges the full new state pension above £240 a week. The sequence is now well rehearsed: breathless speculation, followed by a firm restatement of faith.
The real question isn’t whether the triple lock changes, but what replaces it – and whether that strengthens or hollows out the system we rely on
Behind this lies a stubborn truth: everyone knows that the triple lock can’t carry on forever, yet no one wants to go first with an alternative. Reform UK, currently enjoying a poll bounce, has broken ranks by labelling the policy “unsustainable”. But this feels more like political kite flying than a serious pitch for change.
As former ministers have pointed out, it’s easy to snipe from the sidelines. Much harder is spelling out who loses, and by how much. Until one of the major parties is willing to name the winners and losers, Reform’s stance is unlikely to move the dial.
Electoral fallout
And that gets to the heart of the ‘triple-lock taboo’. Politicians crave the ‘fiscal responsibility’ badge but fear the electoral fallout.
The government’s bruising encounter with winter fuel payment reforms is still fresh: touch the wrong benefit and watch the backlash unfold.
If change is coming, voters deserve honesty about what it looks like
Yet ducking the debate won’t make the pressures disappear. By keeping the triple lock in place, the state pension is due to exceed the personal tax allowance threshold by 2027, meaning pensioners will have to pay tax on it.
The revived Pensions Commission could be an opportunity to confront this and other matters – a rare chance to forge a durable settlement that balances adequacy, fairness and fiscal sense.
We badly need some certainty. New data shows just 43% of households are on track for a decent retirement income, and one in four people expects to rely heavily or entirely on the state pension. Among 44- to 59-year-olds, it’s closer to one in three.
Means testing the triple lock would never work, but it needs an overhaul
Such dependency makes this more than a fiscal thought experiment. When critics call the triple lock unaffordable, they often skip over what would replace it – or what that would mean for pensioners’ living standards.
Unpublished modelling by the Department for Work & Pensions, obtained by LCP, shows the risks. Shifting to an earnings link would push 1.4 million more pensioners below the Pensions UK minimum threshold. Tie it to prices – the cheapest option – and over seven million would fall short.
The revived Pensions Commission could be an opportunity to confront this and other matters
None of these changes would solve the system’s biggest cost drivers: longer lives, stretched retirements and demographic shifts. Retirement now spans decades, yet the state pension age has not kept pace.
Blunt tool
A credible reform, then, needs both a tough pill and a meaningful sweetener.
The tough pill? Accepting that the balance between working life and retirement has drifted. To keep things viable, the state pension age needs to rise slowly but steadily – roughly a year every decade – with plenty of notice to help people plan.
But simply pushing the pension age ever upwards is a blunt tool. In areas with lower life expectancy, many may not live long enough to benefit at all. So, here’s the sweetener: a guaranteed minimum payout. If you’ve worked and paid National Insurance all your life, you should get at least five years of state pension – even if your retirement is tragically short.
Retirement now spans decades, yet the state pension age has not kept pace
Think of it like a guaranteed-period annuity. It wouldn’t break the bank, but it would offer targeted protection. A sliding scale could smooth the edges around any arbitrary cut-offs.
Alongside this, the triple lock itself should evolve. Not scrapped, but repurposed. Rather than let it ratchet upwards forever, use it to lift the state pension to a defined benchmark – say, a third of average earnings – and then switch to a stable earnings link.
Little incentive
But let’s be honest: none of this is likely anytime soon. Labour has promised to keep the triple lock for the full parliament. And, as the next election draws closer, the political appetite for reform shrinks even further. The cost of the triple lock in any given five-year period is still modest, so there’s little incentive to take a gamble.
When critics call the triple lock unaffordable, they often skip over what would replace it
But the taboo won’t hold forever. The real question isn’t whether the triple lock changes, but what replaces it – and whether that strengthens or hollows out the system we rely on.
If change is coming, voters deserve honesty about what it looks like. And they deserve it well before the next crisis forces the issue.
Tom Browne is editor of Money Marketing
