Push to change triple lock in Reeves’s budget
The triple lock has delivered real protection for pensioners, but it was designed for a different economic era. With the cost of maintaining it rising rapidly, we need a more sustainable model that still provides predictability for retirees.
This is the view of wealth management firm Quilter, which has set out a series of ‘asks’ ahead of the upcoming budget.
The Office for Budget Responsibility estimates the triple lock could cost taxpayers £15.5 billion annually by 2030, more than three times higher than was initially expected. This is largely because the policy allows pensions to ratchet upwards faster than either inflation or earnings in volatile years, meaning costs compound over time.
The triple lock also lacks a clear benchmark for what constitutes an adequate State Pension, making long-term planning difficult, the firm said.
“Because of the way inflation and wage data move, pensioners can sometimes benefit twice, first when prices spike, and again when earnings rebound, which makes the system increasingly expensive and unpredictable.
“The government should bring forward a consultation to determine the most appropriate uprating mechanism, and a full appraisal of State Pension income levels should be conducted to set it at an appropriate level.”
As part of this, UK political parties should commit to a cross-party agreement on what the level of the State Pension should be relative to mean full time earnings, and what change is required to the uprating mechanism to ensure a minimum standard of living in retirement, Quilter said.
A more sustainable system
A more sustainable approach, and one that would help align pension increases with the economic prosperity of the country, would be to link the State Pension to a fixed proportion of average earnings, with an inflation safeguard in place for years when wage growth lags.
This ‘earnings link with a temporary CPI trigger’ would protect retirees’ living standards while providing fiscal discipline and long-term stability, Quilter said.
“Our Retirement Lifestyle Report found that the State Pension now accounts for around half of total income for those over 80, underlining just how vital it remains. Reform must therefore be carefully phased and clearly communicated to avoid panic or confusion.
“The triple lock shouldn’t be a political trap; it should be a policy designed to provide long-run confidence, balance intergenerational fairness, and keep pension spending sustainable. Better to reform it thoughtfully now than face more abrupt change later.”
