Pension triple lock will be axed, thinktank IFS says

The triple lock could cost the government billions more

The Institute for Fiscal Studies says the policy is becoming too expensive and unpredictable to maintain over the long term. 

Its estimates suggest that keeping the current system in place until 2050 could cost the government anywhere between £5bn and £40bn, with around £20bn considered the most likely outcome.

The problem is that the triple lock ties government spending to economic conditions that can change sharply. 

State pensions must rise by whichever is highest out of inflation, average wage growth or 2.5%, meaning sudden changes in prices or earnings can significantly increase the cost to the Treasury.

The current figures point towards another sizable increase next year. Inflation is 2.9%, while average wage growth stands at 4.1%, so unless the latest earnings figures change the picture, pensioners are looking at an increase of roughly 4%.

That would add to a state pension bill expected to reach £154bn this year.

The state pension increase now hinges on one key figure

The next key figure will come on Tuesday, when the Office for National Statistics publishes its estimate of average earnings growth between May and July 2026. That number is expected to determine the increase under the triple lock.

The IFS said the policy has now been in place for 15 years, but argued that the government will eventually have to move towards a system that is cheaper and more predictable.

Prime Minister Andy Burnham has publicly backed the triple lock and said he will stick to the commitment made in Labour’s 2024 manifesto.

However, the latest warning suggests the pressure for reform is unlikely to disappear, even if the government chooses to keep the promise for now.