What is the triple lock pension? Everything to know as Andy Burnham hints at social care reform
The state pension triple lock has become a political albatross in the years since it was introduced due to its cost and perceived unfairness, with parties having been unwilling to touch the issue
The triple lock was designed to protect pensioners, but it has become a controversial policy (Image: Getty Images)
The future of the state pension triple lock is unclear after Andy Burnham signalled he would be willing to pursue tough decisions to fund adult social care – but what is the controversial policy?
Burnham’s new social care plan sparked speculation the triple lock could come to an end after 16 years. Former Conservative Chancellor George Osborne was announced in May 2010 and came into effect in the 2011/12 financial year.
Currently, the state pension is worth about £241.30 that is typically paid every four weeks. In order to qualify for the pension people need at least 10 years of National Insurance contributions to get anything and 35 years for the full amount.
What is the triple lock pension?
The triple lock affects anyone who receives the state pension, including those who used the older system before April 2016. Each April, the increase is automatically calculated based on inflation, a minimum safety net set at 2.5 per cent and average wage growth.
Those in favour of the triple lock argue it protects pensioners from poverty and it has been praised for lifting worse off retirees out of relative poverty. They also argue the UK’s state pension is lower that other European countries and that the triple lock brings it up to the continent’s overall standard.
But it has proved to be controversial, despite being introduced to protect pensioners from poverty. Critics have argued since 2011/12 it has become unsustainable and is unfair on younger taxpayers.
Due to how it is measured, the pension typically grows faster than the overall UK economy. The Office for Budget Responsibility has previously warned that as the population ages, it eats into a larger cut of tax revenue, meaning there is less money to spend on other sectors such as education and defence.
Pensioners are also be protected from rough economic circumstances, even as working-age taxpayers see their wages freeze or fall due to inflation. Critics have also argued the triple lock is also not effectively targeting who can benefit most with the lock applying to all eligible pensioners – including ones with considerable wealth.
Should the triple lock be scrapped, it could mean pensioners lose out on several hundred to even over one thousand pounds each year in the next few years. Returning to an earnings link to pensions could save billions of pounds over several years. But scrapping, or even tinkering with, the triple lock could lead to massive electoral consequences.
While some politicians have privately voiced concerns about retaining the triple lock in its current form, many across the political spectrum have hesitated to change it. Older voters typically turn out more than younger voters, risking a major election blowback should any party propose to scrap it.
When asked about the triple lock, Education Secretary Lucy Powell said solving the adult social care crisis would not happen without “big conversations” about spending. She told Sky News that she did not know what Burnham will mention in his speech, but that there could be references to the triple lock.
“We are committed to the triple lock, it’s in our manifesto,” she said. “The triple lock has really delivered for pensioners in this country. Over the course of this parliament, I think we’re going to see state pension rising by about £2,000 a year, significantly.
“And that’s really important so pensioners can know, pensioners watching your show today can know, that their income is secure and will continue to rise over the course of this parliament.
“I don’t know what Andy’s going to say about that today, but I know that what he’s talking about is this big conversation about solving these big problems, but being really honest with people that they come at a cost. They do come at a cost. You can’t just solve the social care crisis without having the big conversations about how you’re going to do that.”
