Key facts
- Labour plans to adjust the state pension triple lock from 2030.
- The current triple lock increases pensions by inflation, 2.5%, or average earnings, whichever is highest.
- The proposed "adjusted triple lock" will increase pensions by prices or 2.5%, whichever is higher, but not automatically with earnings.
- The change is intended to help fund a national care service.
- The Institute for Fiscal Studies estimates the state pension will cost £154bn in 2026/27.
- The government calculates the new policy could raise an additional £15bn a year by 2040.
The UK Labour party has announced plans to reform the state pension's triple lock mechanism, a move intended to help fund a proposed national care service. The current triple lock policy ensures that the state pension increases each April by the highest of three measures: inflation, a 2.5% increase, or average earnings growth.
Under Labour's proposed "adjusted triple lock," set to be implemented from 2030, the pension would still rise in line with prices or by 2.5% annually, whichever is greater. However, it would only increase with average earnings if its value had fallen behind, ensuring it keeps pace rather than automatically rising with earnings.
This reform aims to address the rising cost of state pensions, which the Institute for Fiscal Studies (IFS) estimates will reach £154 billion in the 2026/27 tax year. The government calculates that the "adjusted triple lock" could generate an additional £15 billion per year by 2040. Think tanks like the Resolution Foundation have identified the current "ratchet" effect of the triple lock, where high inflation followed by strong earnings growth can cause pensions to outpace average earnings over time, as a driver of unsustainability.
Labour argues that pensions have already risen significantly relative to average earnings and that the new policy will still ensure annual increases, preventing pensions from falling behind over the long term. The policy's delayed implementation until after the next general election is intended to allow the public to have a say. The Office for Budget Responsibility has previously flagged the triple lock as a contributor to the unsustainability of public finances, predicting it could lead to state pension spending reaching 9% of GDP by 2075/76 if unchanged, compared to the current 5%.