Pensions ‘Triple lock’ under threat

According to the latest figures from The Office for Budget Responsibility (OBR), the state pension triple lock is forecasted to cost the government three times more than the original estimate by 2030, with the annual cost of the triple lock policy potentially reaching £15.5bn.  

In response to the report, the government said it was "committed" to the current policy.

"We are committed to supporting pensioners and giving them the dignity and security they deserve in retirement", a Treasury spokesperson said.

However, the OBR stated the UK's public finances were in a "relatively vulnerable position" owing to pressure from recent government U-turns on planned spending cuts.

Despite the assurances, speculation is rife about the possibility of a triple lock rollback, especially following the recent rumours and speculations around Rachel Reeves’s plans to cut the Cash ISA in her upcoming Mansion House speech on 14th July 2025.  

The cost of the state pension has risen steadily over the past eight decades, from around 2% of  UK GDP  to a current 5%, equating to £138bn, and is forecast to increase to 7.7% of the economy by the early 2070s. According to the OBR, spending on the state pension has gradually been creeping up as an ever increasing proportion of people are living longer and above the state pension age in the UK.  

In an effort to counter this, not only is the triple lock under threat of being changed or even scrapped, but The Department for Work and Pensions (DWP) recently confirmed that the state pension age will increase from 2026 with the change being gradually introduced over a year in an effort to reduce the proportion of people receiving state pension.

At present both men and women are eligible to claim the state pension upon reaching 66, but from next year this age will rise to 67.

The ‘triple lock’ explained

The pension ‘triple lock’ refers to a well-known state pensions policy that ensures state pensions rise every year by either the average earnings growth, inflation (as measured by the Consumer Prices Index) or a flat 2.5% - whichever is highest that year, hence the name ‘triple’ lock.  

It was designed in principle to make sure that state pension value would always have the best growth outcome each year for tax payers. The guarantee that the highest of the three will be what pensions grow against ensures that pensioners have three layers of protection against inflation, hence the name ‘triple lock’. This is incredibly important in maintaining a level of healthy financial security for those relying on their pensions, as it guarantees growth irrespective of how volatile the economy becomes.  #

With the triple lock potentially under threat and the state pension age on the rise, it’s more important than ever to manage your retirement plans carefully to ensure you don’t get caught out. If you want to find out more about how you can plan ahead and navigate these changes, why not give us a call on 0333 323 9065 or book a free non-committal initial consultation with one of our chartered advisers to find out how we might be able to help you. 

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This article is intended for general information only, it does not constitute individual advice and should not be used to inform financial decisions. 

The Financial Conduct Authority (FCA) does not regulate cash or tax advice.