Big changes could be on the horizon.
Tory leader Kemi Badenoch has opposed Labour plans to change the State Pension triple lock (Image: Getty)
The State Pension age would have to be raised to above 70 to meet the cost of the Conservatives’ commitment to keep the triple lock in place, the pensions minister has claimed. In a speech at the Labour Party conference in September, the Prime Minister Andy Burnham revealed plans for the state pension to move away from the current triple lock policy. The State Pension is currently uprated in line with inflation, average earnings or 2.5%, whichever is highest. The three-layered protection was brought in by the Lib Dem-Conservative government in 2010, in a bid to tackle pensioner poverty and ensure that the State Pension kept pace with the cost of living and rising wages.
But compounded increases mean the policy is now far more costly than had initially been expected when it was conceived and is rising faster than average earnings. In his first Budget as Chancellor in late October, John Healey confirmed the Government’s commitment that the current system would be altered.
He said: “The Prime Minister has already announced that from 2030 we will adjust the Triple Lock so that the State Pension rises every year and keeps pace with their earnings and inflation.” Mr Healey added the move would save around £15billion a year by the end of the 2030s. In a video shared on social media last week, the DWP confirmed how the new mechanism will work.
“We’re adjusting it so it rises each year by inflation, 2.5%, or the amount needed to maintain its value relative to earnings,” the voiceover explained. “This means the State Pension will keep up with earnings over time, instead of growing faster than them, which it does now.
“Nothing changes until 2030. And the State Pension will still rise every year after that. This adjustment will make a fairer, more sustainable pensions system for everyone.”
The Government is planning to pass legislation on it before the next general election, which must be held by August 2029 at the latest. If the Labour Government remains in power, it could then implement the policy. But Tories have opposed the plan, committing to keep the triple lock in place if they win back the keys to Downing Street, but have yet to set out how this would be funded.
Triple lock: Pensioners demand Burnham take action
The Government estimates that annual savings from a reformed triple lock would be around £50 billion a year by 2050. Pensions minister Torsten Bell claims the Tories will be forced to speed up planned State Pension age increases to mitigate the cost if they plan to keep it in place.
“If you don’t want to have an adjustment to the triple lock, then you will need to do other things to make the state pension remotely sustainable,” he told The Guardian. “We don’t need to guess what they would do because they’ve literally just done it, which is they repeatedly and at very short notice accelerated the increases in the state pension age.”
The State Pension age is currently being increased from 66 to 67 for both men and women under the accelerated timeline, with a further increase to 68 currently expected to take place between 2044 and 2046.
Mr Bell claims the Tories could be forced to raise it higher still. “All I’m saying is, Conservatives do raise the state pension age aggressively, and they have,” he said. “And even though they know that the triple lock should change, they are opposing it – and the consequence of that is they would end up making people wait into their 70s.”
The Conservative Party has been approached for comment.
The full rate of new State Pension is £241.30 a week, though the amount you receive could differ, depending on: if you were contracted out before 2016; the number of National Insurance qualifying years you have; and if you paid into the Additional State Pension before 2016.
Your State Pension amount depends on your National Insurance record. You’ll be able to claim the new State Pension when you reach State Pension age if you’re a man born on or after April 6, 1951; a woman born on or after April 6, 1953. Anyone born before that will receive the basic State Pension.
You can find out more on the GOV.UK website.