Changes to the triple lock – what’s it all about?

As has been well-publicised, the government has announced that it wishes to implement a new, free at the point of use national care service in England and Wales in 2030. This will need substantial funding and the government has suggested that this can be, at least partly, achieved by making changes to the triple lock on the State pension.

What is the triple lock?

The triple lock increases the State pension each year in line with the higher of:

• CPI inflation;
• Earnings growth; or
• 2.5%.

In the first year that the triple lock was introduced in April 2011, the State pension increased by RPI inflation at 4.6% rather than CPI at 3.1%. The triple lock was abandoned for one year in 2022 due to distortions in earnings growth following the pandemic meaning that the 3.1% CPI increase was applied rather than 8.6% earnings growth.

Over the 17 years in which the triple lock has applied, the State pension has been increased 7 times by earnings growth, 6 times by inflation and 4 times by 2.5%.

What are the proposed changes?

At the Labour conference in September 2026, Andy Burnham proposed that, from April 2030, the triple lock will change so the State pension will then increase each year by the higher of:

• CPI inflation;
• 2.5%; or
• The amount required to ensure that the State pension grows in line with average earnings growth since the start of the new regime.

This new proposal is intended to remove the ‘ratcheting’ effect that exists in the current triple lock where, for example, a high rate of earnings growth in one year is effectively protected into the future by the CPI and 2.5% increases. The new proposal removes the earnings link but provides an ‘underpin’ that the value of the State pension will not fall below a stated percentage of average earnings. A figure of 30% has been mooted.

The government’s proposal is a halfway house between the current system and a proposal by the Institute for Fiscal Studies (IFS) to use a smoothed earnings growth approach (as is used in Australia) with no 2.5% floor. By retaining the 2.5% floor, the new proposal is likely to be more expensive than the IFS’ approach because, at some point, inflation and average earnings growth could be less than 2.5% and the 2.5% floor will lead to a higher increase in the State pension, as has happened 4 times since 2011 with the current system.

The IFS has calculated that the current triple lock has increased annual State pension expenditure by £16 billion up to 2026-27. Had the new Burnham proposals applied since 2011, the cost would have been £7 billion.

However, there may be no immediate savings. It is widely thought that this change will produce no immediate savings until earnings growth ceases to outpace inflation and 2.5% which may not happen until the mid-2030s or later. The last four triple lock increases have been based on earnings growth which has exceeded both CPI inflation and 2.5%.

What will be the effects of this change?

It seems very doubtful that this change will produce sufficient government savings to fund a revised social care system for many years. However, it is likely to slow future increases in the State pension.

This, combined with the fact that the State pension will, from next April, exceed the income tax personal allowance and so potentially become partly taxable, may put more pressure on the finances of those reliant on the State pension.
Those who have not attained State pension age should give serious consideration to providing additional income in retirement. Tax-efficient schemes such as pensions and ISAs may be appropriate vehicles.

Member pension contributions generally receive income tax relief and are tax-exempt whilst invested. Whilst income drawn down is subject to income tax, up to 25% of the pension fund can be taken as tax-free cash.

Conversely, ISAs are funded from post-tax income and/or capital which accrues in a tax-exempt fund (apart from the proposed 22% tax charge on interest from cash holdings within a Stocks & Share ISA) with the investor having complete flexibility to draw benefits at any time tax-free.

From 6 April 2027, the value of both pension death benefits and ISAs form part of a deceased investor’s taxable estate for inheritance tax purposes.

If you or someone you know would like some guidance in this area, get in touch and arrange a free initial consultation.

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.

The information in this article is based on current laws and regulations which are subject to change as at future legislations.

A pension is a long-term investment. The value of an investment and the income from it could go down as well as up.

The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

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

The information in this article is correct as at 22/10/2026.