State pension triple lock could face major shake-up

The state pension triple lock – long considered politically untouchable – is coming under increasing scrutiny as defence concerns and mounting pressure on public finances prompt a reassessment among Westminster's top brass. In a remarkable development, prominent figures from across the political spectrum are now publicly questioning whether Britain can continue to afford it. Former Tory chancellor Sir Jeremy Hunt and Labour veteran Baroness Harman have both challenged the consensus, suggesting the policy may no longer be viable. Sir Jeremy cautioned that pensioners might reconsider their stance if they understood the burden being placed on younger generations, while Baroness Harman argued the system should be means-tested to help finance defence. The triple lock ensures pensions increase annually by whichever is highest: inflation, wage growth or 2.5%. For years, challenging it was considered political suicide. Now MPs from all sides are indicating that the political consensus is changing. Labour MP Graeme Downie stated there is "an appetite in all parties" to review the policy, noting that if welfare funding is redirected towards defence "there are no sacred cows". The scale of the rise has been dramatic. Since 2010, the state pension for a single person has climbed from £423 monthly to £1,048 – an increase of nearly 150%. During the same timeframe, average wages have grown by just 66%, while 55% inflation has eroded most real-terms gains for workers. Expenditure on pensioners has also soared – from 3.3% of GDP in the mid-1980s to a forecast 5.4% by the early 2030s. The triple lock has been a significant driving force behind that increase, alongside a growing elderly population. Economists caution that the policy is becoming increasingly difficult to maintain. Sir Charles Bean, former deputy governor of the Bank of England, said: "It's a terrible policy... that is unsustainable." The debate has been further fuelled by rising global instability and demands to increase defence expenditure. The UK currently allocates 2.4% of GDP to defence, however NATO allies have agreed to push this figure up to 3.5% by 2035. This would demand an additional £40bn annually - more than the combined budgets of the Home Office and Ministry of Justice. Simultaneously, welfare expenditure is on the rise, set to climb from 10.7% of GDP at the start of this Parliament to 11.2% by the next decade - equivalent to £406.9bn. Of that total, pensioner benefits alone will reach £196bn, up £45bn in just six years. Former NATO chief Lord Robertson warned: "We cannot defend Britain with an ever-expanding welfare budget." When the triple lock was introduced in 2010, it was projected to cost £5.2bn annually by the late 2020s. That figure has since soared to £15.5bn owing to inflation shocks and robust wage growth. Pensioners have seen repeated increases: 10.1% rise in 2023 8.5% rise in 2024 With fresh inflation risks tied to geopolitical tensions, costs could escalate further. Despite the growing financial burden, the policy remains enormously popular. Polling indicates around 66% of voters support retaining it, while just 11% want it scrapped. However, critics argue that such backing ignores the financial cost. Sir Charles said voters "always like having money spent on them if there's no price tag attached". Advocates claim the triple lock was essential to reverse years of decline. Yet specialists say the issue it was designed to address has largely been resolved. Pensioner incomes now stand at around 84% of the population average before housing costs – an increase of 11 percentage points since 2000. Poverty amongst pensioners has dropped to roughly 15%, down from over 25% in the 1990s. By contrast, children and working-age households are now at greater risk of falling into poverty. Behind closed doors, there is increasing acknowledgement in Westminster that change may be unavoidable. Nevertheless, both Labour and the Conservatives remain publicly dedicated to the triple lock for the time being. Chancellor Rachel Reeves has insisted manifesto pledges will be honoured, while shadow chancellor Sir Mel Stride said the Tories are "fully committed". Specialists suggest the triple lock could be substituted with a more straightforward system: Linking pensions to earnings Or combining earnings with inflation protection One estimate suggests this could save around 0.5% of GDP – roughly £15bn a year.