The future of the State Pension triple lock is being called into question after campaigners claimed scrapping it could save taxpayers up to £19billion a year within a decade.
The influential Intergenerational Foundation (IF) said the long-standing policy is now “unsustainable, unpredictable and unfair” -warning it is piling pressure on younger workers while handing across-the-board rises to wealthier retirees. Under the triple lock, the State Pension rises each year by the highest of inflation, wage growth or 2.5% – a guarantee introduced in 2011 to boost retirement incomes.
But new research suggests the cost has spiralled, with spending forecast to hit £146billion this year = around 5% of GDP – up from £86billion in 2005-06, a near 70% real-terms increase.
By the mid-2030s, reforming the system could save £19billion annually, rising to £38billion a year by the mid-2040s, according to the report. That equates to almost £1,000 per working household.
Conor Nakkan, senior researcher at IF and author of the report, said: “The triple lock may have been introduced with good intentions, but it has become an expensive and poorly targeted policy.
“It now delivers large increases to all pensioners, including millions who are already well-off, while younger generations face stagnant living standards, high housing costs and a growing tax burden.”
He added: “This report demonstrates how we can reform the triple lock, save taxpayers tens of billions of pounds, and still do more to protect poorer pensioners.
“The current system is not only fiscally unsustainable. It is also intergenerationally unfair.”
What could replace the triple lock?
The IF is calling for a major overhaul of how pensions are uprated.
It proposes that increases should be capped at inflation until 2030-31, before switching to a formula based on the average of inflation and earnings thereafter – a model also backed by the Organisation for Economic Co-operation and Development.
The think tank argues this would smooth out volatile year-to-year rises while maintaining a link to living standards.
Crucially, it says savings should be redirected to those most in need.
A new “Low-Income Pension Supplement” would give Pension Credit claimants an extra £30 a week – or £1,560 a year – from 2026-27, with the payment ignored in means testing.
Mr Nakkan said: “If the government wants to protect pensioners from hardship, it should do so directly. A new Low-Income Pension Supplement would provide a meaningful boost to those pensioners who need support the most, without continuing to hand large increases to everyone else.”
Mounting pressure on public finances
The report warns that an ageing population will push costs even higher in the coming years, increasing the burden on working-age taxpayers.
It also highlights how spending per working-age adult has jumped from around £3,200 in 2011-12 to £4,100 today – a 28% real-terms rise.
Without reform, the triple lock is expected to remain the main driver of rising pension costs, at a time when Britain faces weak growth, high debt and stretched public services.
The IF concludes that action is now urgent, warning that sticking with the current system risks “leaving younger and future taxpayers shouldering an increasingly heavy burden”.
The politically sensitive triple lock has long been seen as untouchable. But with costs climbing sharply, pressure is mounting on ministers to rethink one of the most expensive guarantees in the welfare system.
