Calls mount to scrap state pension triple lock over costs
With the autumn budget approaching, pressure is mounting on the government to consider scrapping the state pension "triple lock", as debate intensifies over whether the policy is still affordable. The British Chambers of Commerce has called for it to be axed, with savings redirected towards tackling youth unemployment, while the Institute for Fiscal Studies (IFS) has highlighted its rapidly growing cost. Introduced by George Osborne in 2010 but originally a Liberal Democrat policy from the coalition negotiations, the triple lock has been credited with protecting pensioners' living standards, but critics increasingly argue it is unsustainable given the UK's fiscal pressures.
The triple lock raises the state pension each year by whichever is highest of inflation, average wage growth, or 2.5%. This year it added 4.8%, benefiting more than 12 million people with rises worth up to £575 annually. The IFS says the state pension bill will hit £154bn this year, £16bn higher than without the triple lock, and could cost around £20bn a year by 2050, though estimates range from £5bn to £40bn given economic uncertainty. The Office for Budget Responsibility has noted the policy has already cost roughly three times initial projections, and the Resolution Foundation has branded it "a terrible policy", while supporters, including Age UK, insist it remains vital for protecting pensioners' incomes.
In short
- Pressure grows to scrap pension triple lock ahead of the budget
- IFS says it costs £16bn a year more than without it
- Business group wants savings redirected to youth unemployment
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
The triple lock gives pensioners a predictable safeguard against rises in prices and wages, helping protect their living standards and reduce the risk of poverty in retirement. Supporters argue that older people have planned around this protection and that weakening it could leave those on fixed incomes especially exposed, while the policy’s long-term cost estimates remain uncertain.
The case against
With public finances under pressure, a guarantee to increase pensions by whichever of inflation, wage growth or 2.5% is highest can add substantially to spending, with costs already exceeding early projections. Critics argue that directing some of this money towards other priorities, such as youth unemployment, or adopting a more predictable measure could make the system fairer between generations and more sustainable.
Explained simply
The state pension is a regular payment from the government to people who have reached pension age, funded through public money. The triple lock sets how much it rises each year: by whichever is highest of inflation, average wage growth or 2.5%.
The policy began in 2010 and has helped pension payments keep pace with rising prices and earnings. More than 12 million people receive the state pension, so annual increases affect a large part of the public finances.
Supporters, including Age UK, say the formula helps protect pensioners’ living standards. Critics such as the British Chambers of Commerce and the Institute for Fiscal Studies point to its growing cost and argue that the money could be used elsewhere.
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Originally published by The Guardian as “‘Costing billions’: is the pensions triple lock a lifeline or simply unaffordable?”.