Andy Burnham is facing calls to abandon the triple lock on state pensions and redirect the resulting savings to assist the most vulnerable pensioners. The Intergenerational Foundation (IF), an influential thinktank, argues that this approach would establish a more fiscally sustainable and predictable framework for pension uprating.
The IF’s recommendations to the Labour Party leader emphasise that savings from ending the triple lock should not simply vanish from the pension system. Instead, they propose allocating part of these funds to benefit low-income retirees. A key suggestion is the introduction of a new Low-Income Pension Supplement targeting households already claiming Pension Credit.
The thinktank explains:
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“Replace the triple lock with a more stable and sustainable uprating mechanism. IF’s preferred reform is to cap State Pension increases at CPI inflation until 2030-31, and subsequently uprate the State Pension by the average of inflation and earnings. Redirect some of the savings from triple lock reform towards poorer pensioners, for instance by introducing a new Low-Income Pension Supplement for households receiving Pension Credit.”
Currently, approximately 1.4 million individuals receive Pension Credit, a means-tested benefit aimed at those of State Pension age and above. Pension Credit comprises two components: Guarantee Credit and Savings Credit. Guarantee Credit provides a weekly top-up to the income of eligible pensioners, ensuring they can meet essential living expenses. The income threshold for this benefit is set just below the value of the full new State Pension.
Pension Credit is administered nationally by the UK government, although in Northern Ireland the administration is devolved. The Guarantee Credit element is a critical support for older people facing financial hardship, helping prevent difficult choices between essentials such as food, heating, and electricity.
Most Pension Credit claimants receive Guarantee Credit, with about one-third receiving both Guarantee and Savings Credit, while a small minority receive only Savings Credit. Department for Work and Pensions (DWP) statistics provide insight into the demographics of recipients.
Those more likely to be eligible for Pension Credit include older individuals who care for others or receive disability benefits such as Carer’s Allowance or Attendance Allowance. These additional benefits increase the Guaranteed Credit amount through premiums, thereby enhancing eligibility and the level of support received.
By reforming the pension uprating system and targeting support through the proposed supplement, policymakers aim to create a more equitable environment for pensioners with the greatest financial needs.