The state pension triple lock has long been a topic of debate, with many questioning its sustainability and fairness. The Resolution Foundation, a think-tank with a strong voice in government circles, has recently weighed in, arguing that the time has come to scrap this costly and wasteful policy. The triple lock, originally introduced in 2010 to address the state pension's low value relative to wages and living standards, has now become a burden, with the state pension rising significantly due to high inflation and wage growth.
The policy, which ensures the state pension increases each year by the highest of inflation, wage increases, or 2.5%, is currently costing three times more than intended, according to the Office for Budget Responsibility (OBR). This has led to a growing chorus of voices, including prominent Labour MPs, calling for reform. The think-tank's economist, Alex Clegg, highlights the policy's flaws, suggesting it may not be the best use of funds during a tight fiscal reality. The report, authored by Clegg and CEO Ruth Curtice, argues that the triple lock is far too expensive and fails to reduce poverty, with pensioner poverty rates rising since its introduction.
The Resolution Foundation proposes a new system called a "smoothed earnings link," which tracks wage growth while protecting the state pension's value from temporary price shocks. This system, similar to one used in Australia, would provide a more transparent, predictable, and fair approach across generations. The report suggests that the state pension bill is £12.6 billion higher than it would have been under this new system since 2011, and switching to it would result in a net saving of around £650 million by 2029-30. This proposal aligns with the idea that the money could be better spent supporting younger generations, addressing the issue of one million young people not in education, employment, or training in the UK.
However, the challenge lies in the political toxicity of scrapping the triple lock among older voters. All major political parties, except the Greens, are committed to it. Tony Blair and former chancellor Jeremy Hunt have both warned of its long-term unaffordability and immorality, respectively. The pensions minister, Torsten Bell, previously described it as a "silly" system, a view that has been echoed by other politicians. The debate continues, with the government committed to the triple lock for the current parliament, but the Resolution Foundation's report adds fuel to the fire, urging politicians to find the courage to reform and ensure a fairer system for all generations.
