From MoneyWeek · · 1m 10s
State Pension Triple Lock Change Needed
Labour plans to reform state pension triple lock by 2030 to address sustainability concerns.
In brief
Labour plans to reform state pension triple lock by 2030 to address sustainability concerns. Labour will adjust state pension triple lock mechanism from 2030 to prevent unsustainable costs while funding social care. Originally reported by MoneyWeek.
Labour's pension reform plan
Andy Burnham announced Labour will change the state pension triple lock mechanism if elected in next general election.
“I won't pretend some of this won't be difficult, I accept I may pay a political price”
Triple lock mechanism
The triple lock uprates state pension by highest of average earnings, inflation or 2.5% each year.
“the policy which uprates the state pension each year by the highest of average earnings, inflation and 2.5%”
Current pension costs
Public spending on state pension will reach £154 billion annually by 2026/27.
“Public spending on the state pension in 2026/27 is £154 billion a year”
Cost projections
State pension spending is £16 billion higher than without triple lock and will reach 9% of GDP by 2075/76.
“spending on the state pension is now £16 billion per year higher than it would have been without the triple lock”
Social care funding
Burnham says savings from adjusted triple lock will fund free social care at point of use.
“Burnham says the significant savings will help fund a new National Care Service, with social care free at the point of use”
Impact on pensioners
Full pensioners would receive £490 less annually under new system compared to current triple lock.
“For those getting the full old basic state pension, the difference would be around £490 per year”
Generational impact
Pensioners could face £500-£600 gap in today's prices by age 84.5 under new system.
“For someone who has just started claiming the state pension at age 66, they could be 84 and a half years old before they face a gap of between £500 and £600 in today's prices”
In short
Labour will adjust state pension triple lock mechanism from 2030 to prevent unsustainable costs while funding social care.
