Rachel Reeves nightmare as £915 state pension triple lock hike threatens fiscal meltdown

Pensioners really like the “triple lock” system, which has helped many avoid poverty since 2011. This system increases the state pension each year based on the highest of three things: average earnings, inflation, or 2.5%.

Thanks to the triple lock, pensions rose by 11.1% in 2023 and 8.5% in 2024, bringing the maximum yearly state pension to £11,502. In April, pensioners will get another 4.1% increase, raising it to £11,973.

Experts thought future increases might be smaller as inflation and wage growth slowed. But last week, the Bank of England (BoE) warned that inflation is likely to rise again, possibly reaching 3.7% by summer. This could force Rachel Reeves, the Chancellor, to find an extra £1.3 billion to cover higher pension costs and balance the budget.

Reeves is already struggling with limited funds, and this could make things even harder. Many in the Treasury dislike the triple lock and would like to get rid of it, but no one wants to take the blame for cutting it. It’s like a game of “pass the political hot potato,” and Reeves might end up holding it.

If inflation hits 3.7% in September 2025, pensioners could get another £443 in April 2026, raising the yearly pension to £12,416. Combined with the 2025 increase, this would add £915 to the pension, putting more pressure on Reeves and the Labour government.

Meanwhile, the economy is struggling. The BoE has lowered its growth forecast for 2025, partly because of Reeves’ policies, including threats of higher taxes. An aging population is also making pensions more expensive, and some experts think the triple lock will become too costly to maintain by 2035. With Reeves’ economic policies, this problem might arrive even sooner.

Reeves has made some tough decisions, but many think they were the wrong ones. Scrapping the triple lock could be the hardest decision yet, and it would likely anger pensioners who already feel let down. She might want to pass this problem to someone else, but thanks to her handling of the economy, it’s likely to blow up in her face.

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