The UK’s state pension triple lock guarantees that pensions increase every year by the highest of three measures: inflation (CPI), average earnings growth, or 2.5%. This has led to significant rises in recent years, such as an 11.1% increase last year. However, there are growing concerns about whether the triple lock is sustainable in the long term.
Experts, including Amy Knight from NerdWallet, warn that the triple lock is under review by the Department for Work and Pensions (DWP). They point out that funding the state pension is a major expense for the government, costing about a quarter of all social security spending. This includes not only pensions but also benefits like Universal Credit.
If the triple lock continues, the state pension could rise to around £13,000 per year. However, with inflation predicted to reach 3.7% this year, pension increases might become more expensive. For example, a 3.7% rise would mean an extra £8.50 per week for those on the new state pension and £6.50 for those on the basic state pension.
Some experts, like Steven Cameron from Aegon, argue that the triple lock is unfair to younger generations because it could lead to pensions growing faster than wages over time. They suggest alternatives, such as smoothing increases over three years, to make the system more sustainable.
Labour’s new pensions minister, Torsten Bell, has also called for reforms to the state pension. Meanwhile, the state pension is set to rise by 4.1% in April, giving pensioners a boost for the next year.
In summary, while the triple lock has benefited pensioners, there are concerns about its cost and fairness, and it may face changes in the future.
