The state pension triple lock should be abolished “as soon as possible”, according to the Institute for Fiscal Studies (IFS), as the policy threatens to cost taxpayers £45bn a year by 2050.
Key Takeaways: The Triple Lock Debate
✅ What is the triple lock?
Guarantees yearly state pension increases by the highest of:
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Inflation (CPI)
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Average earnings growth
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2.5% minimum
✅ Current costs & projections
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Adds £11bn/year to public spending
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Could hit £45bn/year by 2050 (IFS estimate)
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State pension bill: £145.6bn in 2025/26
✅ Labour’s stance
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Pledged to keep triple lock until 2029
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But faces £22bn fiscal black hole
Why the IFS Says It’s Unsustainable
Paul Johnson (outgoing IFS director) warns:
“The triple lock can’t go on forever. We should cap pensions at 33% of median earnings, then switch to a smoothed earnings link.”
Proposed Alternatives to the Triple Lock
Policy | How It Works | Pros | Cons |
---|---|---|---|
Double Lock | Tied to inflation + earnings | Less costly than triple lock | Still unpredictable |
Smoothed Earnings Link | Long-term wage growth + inflation top-ups | More stable for budgets | Slower pension growth |
Fixed % of Median Earnings (e.g., 33%) | Prevents runaway costs | Clear long-term planning | Less protection in crises |
Will the Triple Lock Be Scrapped?
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Political risks: Isle of Man reversed its double lock plan after backlash
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Labour’s dilemma: Must choose between pensioner votes and economic reality
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Tax relief fears: IFS warns against cutting pension tax breaks for workers
What Happens Next?
🔹 If triple lock stays: Pensions keep outpacing wages, straining public finances
🔹 If reformed: Could save £22bn+, but risk alienating older voters
Torsten Bell (Pensions Minister):
“A smoothed earnings link could save 0.5% of GDP by 2040s – half the cost of current plans.”
What Should Savers Do?
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Check your state pension forecast (Gov.uk tool)
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Boost private pensions – Tax relief may not last forever
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Prepare for changes – Future governments will reform pensions
#Pension #TripleLock #StatePension #UKFinance #IFS #Retirement #TaxRelief #LabourGovernment
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