In his first conference speech as prime minister, Andy Burnham announced that the triple lock mechanism for the state pension would change from April 2030.
The government has committed to retaining the triple lock this parliamentary term as per its manifesto pledge, but will adjust it to become a ‘double lock’ system from April 2030 if they win the next general election.
The triple lock guarantee means that the state pension increases in line with whichever is higher of the inflation rate, average earnings or 2.5%. The new double lock system would see the state pension increase in line with the greater of 2.5% or inflation.
Stuart Price, Partner and Actuary at Quantum Advisory, said:
“There’s no doubt that the triple lock has done its job to date, which was to get many pensioners out of poverty. However, the triple lock guarantee has always been controversial with some arguments that it is too generous and has become outdated over time.
“Although the policy has played an important role in supporting pensioner incomes, it is also a major driver behind spending. As pensioners are living longer, they are receiving the state pension for longer and costs are increasing for the government.
“While the policy has required a review for some time, governments have been reluctant to change the triple lock due to the potential backlash from voters who receive the state pension, a sizable voting bloc in elections. Now it appears change could be on the horizon.
“The proposal to switch to a double lock system, taking into account inflation and 2.5%, has been put forward with a noble objective at its heart as the savings would support a national care service to help people as they get older.
“However, it is unclear whether the savings will be enough to sufficiently fund social care and further clarification is needed on how the state pension will hold its value relative to earnings over time. With the date of the change planned for April 2030, after the next general election, it will be interesting to see if this switch from triple lock to double lock will actually come to fruition.”
