UK State Pensions triple lock to be scrapped

Following the Labour Conference in Liverpool, the state pensions triple lock will be scrapped in place of a double lock, according to prime minister Andy Burnham.

Burnham explained that from April 2030, the state pension would continue to rise each year by 2.5% or inflation, whichever is highest, but would no longer be matching earnings – the original third guarantee of the triple lock.  

‘It will hold its value relative to earnings over time so that pensioners will always share in the rising prosperity of the nation. This change will generate significant savings, which we will use to build up our own National Care Service,’ Burnham told the Conference.

Burnham went on to compare the policy as one that was as significant as the ‘creation of the NHS itself’.  

The triple lock is considered a gold standard for pensioners in the UK, which represent a large voter base, and as such governments have been reluctant to touch it despite a heated debate continuing around its fairness after so many years since its introduction by the Conservative-Liberal Democrat coalition government back in 2011.  

Regardless of which side of the debate people fall on, it is clear that the scrapping of the triple lock represents a bold move by Burnham’s government.  

"Retaining the inflation link will be comforting to current and future pensioners and if giving up the earnings link provides savings which can be directed towards the chronically underfunded care system then this will be welcomed by many. However, the devil is always in the detail and we eagerly await the promised detail in the next Parliament." – Jane Reade, Head of Financial Planning at The Private Office (TPO).  

The 'Triple Lock' explained

The ‘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 pensioners. The guarantee that the highest of the three will be what pensions grow against ensures that savers have three layers of protection against inflation. 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.

If you want to find out more about retirement planning, 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.

Arrange a free initial consultation

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