Chancellor Rachel Reeves is facing fresh calls to scrap the state pension triple lock after a leading think tank branded the policy “terribly designed” and warned it risks causing further economic damage. The Resolution Foundation, in a report titled “What a Ratchet”, has urged the Chancellor to abolish the guarantee without delay, arguing that it has become significantly more expensive than originally planned and is no longer an effective tool for reducing poverty.
The left-leaning think tank, formerly headed by current pensions minister Torsten Bell for almost a decade, argues that the triple lock’s rising costs pose a serious threat to public finances. Ruth Curtice, the foundation’s chief executive, said: “The pensions triple lock is a terribly designed policy that has proven to be far more expensive than originally planned, far less effective at reducing poverty than many hoped, and risks causing further economic harm if it continues for much longer.” She added: “We cannot afford to keep this policy for another parliament. The Government should call time on the triple lock as soon as possible and put the savings to far better use.”
According to the report, the triple lock has been “remarkably ineffective at reducing poverty”. Pensioner poverty rates fell by 15.8 percentage points in the 15 years before its introduction – between 1997-98 and 2011-12 – but have since risen by 2.3 percentage points in the 12 years since it was adopted. The foundation contends that the case for boosting pensioner incomes over and above others has now run out, noting that typical pensioner households now have incomes comparable to those of non‑pensioner households. Pensioners have experienced three times the living standards growth of non‑pensioners over the last two decades.
Triple lock mechanism and rising costs
Introduced by former Conservative chancellor George Osborne in 2010 and implemented from the 2011-12 financial year, the triple lock guarantees that the state pension rises each April by whichever is highest: consumer price inflation (CPI), average wage growth, or a minimum floor of 2.5 per cent. It was temporarily suspended for the 2022-23 financial year due to volatile earnings figures after the pandemic, with pensions uprated by only 2.5 per cent that year. Before 2011, state pensions had been uprated at least in line with prices since 1980.
This April, the full new state pension increased by 4.8 per cent, rising from £11,973 annually to £12,548 following strong wage growth recorded last summer. Government spending on the state pension reached £138 billion during the 2024-25 tax year, accounting for around five per cent of overall government expenditure. The Resolution Foundation forecasts that figure will increase to £154 billion in the current financial year. Looking further ahead, the foundation predicts state pension spending will rise by a further £13.8 billion by 2029-30 if the current system remains in place.
The Office for Budget Responsibility (OBR) has also highlighted the policy’s escalating cost. It estimates that the triple lock will cost £15.5 billion a year by 2029-30, nearly three times the £5.2 billion originally forecast. The OBR projects that state pension spending could be £40 billion higher or lower depending on economic conditions, underscoring the “ratchet effect” that makes costs highly sensitive to volatility. One estimate suggests the triple lock adds around £10 billion to annual pension costs compared with indexing solely to prices or wages.
Proposed alternatives and wider calls for reform
The Resolution Foundation has proposed replacing the triple lock with a “smoothed earnings” link. Under this system, pension increases would continue to track either wage growth or inflation – whichever is higher – but would include protections designed to prevent unusually large and volatile jumps. Based on current economic forecasts, the foundation says weekly state pension payments would reach £199.65 by 2029-30 under the revised system, compared with £200.95 under the existing triple lock. The Treasury would consequently save around £650 million during that year alone.
The think tank is not alone in calling for reform. The Tony Blair Institute (TBI) has urged Labour to scrap the “unaffordable” triple lock and replace it with a smoothed link to earnings from 2030, and has also proposed a more radical “Lifespan Fund” to overhaul the state pension system. The Intergenerational Foundation argues the triple lock is unsustainable, unpredictable and intergenerationally unfair, suggesting a cap on increases at inflation until 2030-31 before moving to an average of inflation and earnings. It estimates such a reform could save around £19 billion a year by 2035-36.
Former Conservative chancellor Jeremy Hunt has warned that the triple lock is an “anchor drag on economic growth” and “not fair on future generations”, calling on all major parties to pledge to remove it after the next election. The Institute for Fiscal Studies (IFS) and the Organisation for Economic Co-operation and Development (OECD) have both questioned the policy’s long-term viability and cited its unpredictability.
Chancellor Rachel Reeves has recently committed to retaining the triple lock for the duration of the current parliament, with budget documents stating the government would support “over 12 million pensioners through a commitment to the triple lock for the duration of this parliament.” However, a growing concern is that rising state pension payments driven by the triple lock could push more pensioners above the income tax personal allowance of £12,570, forcing them to pay tax on their state pension for the first time – a politically sensitive prospect.
The foundation’s call carries particular weight given the background of Torsten Bell, the current pensions minister, who served as its chief executive from 2015 until his election as MP for Swansea West in 2024. Several policy recommendations previously advanced by the Resolution Foundation on issues including the National Living Wage, child poverty and employment rights have since been reflected in Labour legislation. The state pension currently amounts to 30 per cent of median full-time earnings, close to the 31 per cent ceiling recommended by the first pensions commission in 2004 – a threshold the think tank says underscores the diminishing need for further above-inflation increases for pensioners.
