Andy Burnham faces calls to abandon the state pension triple lock amidst mounting concerns over its escalating cost. The Intergenerational Foundation (IF), responding to the Second Pensions Commission Interim Report, has recommended scrapping the triple lock to ensure long-term sustainability of pension spending.
The triple lock guarantees that the state pension rises each year by the highest of three measures: CPI inflation, average earnings growth, or 2.5%. However, the thinktank argues this mechanism drives pension expenditure upwards in an unpredictable and arbitrary fashion, placing strain on public finances.
Instead, the IF proposes capping annual pension increases at the Consumer Prices Index (CPI) inflation rate until the financial year 2030-31. After that point, pension rises would be linked to a combination of inflation and earnings growth.
“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 then uprate the State Pension by the average of inflation and earnings thereafter.”
The thinktank’s report highlights that the 2020 Quinquennial Review estimates the triple lock will cause state pension expenditure to grow by 24% by 2085 compared to 2020. Adjusting the policy would therefore significantly contribute to the long-term fiscal sustainability of the pension system.
Because National Insurance Contributions (NICs) typically grow with wages, maintaining the triple lock-which may increase pensions faster than wages-causes a growing gap between benefit payments and income. The IF suggests a “double lock” approach, uprating pensions in line with either wage or price inflation, whichever is higher, as a step towards sustainability.
Despite these pressures, Andy Burnham has reaffirmed his support for the triple lock, stressing its importance as a commitment to pensioners. He has also emphasised the necessity for comprehensive, long-term reforms in health and social care to ensure the system can meet increasing demand.
In political developments, Jeremy Healey has returned to the cabinet as Chancellor of the Exchequer less than two months after stepping down as Defence Secretary. A former Treasury minister, Healey has criticised what he describes as a “Treasury orthodoxy that’s a dead hand on dynamic government,” arguing that defence spending is often viewed merely as a cost rather than a driver of economic growth.