In theory, the triple lock on the state pension, which guarantees that pension incomes rise by either 2.5 per cent, the rate of average earnings growth, or in line with the Consumer Price Index – whichever of the three is higher – shouldn’t be contentious.
Who doesn’t agree that the elders of our society, who have contributed so much throughout their lives, should have financial security in retirement? Particularly given that the vast majority of them will have paid both income tax and national insurance.
Yet, the state pension triple lock is one of the thorniest topics in British politics today.
As a journalist who, for my sins, is no longer entirely anonymous, I often receive messages, letters and emails from readers. But the kickback when I argue that the state pension is to all intents and purposes a benefit is striking.
After I pointed out in a previous column that the state pension is by far the single biggest state benefit in the UK, dozens of people wrote in insisting that it is not a benefit. Many argued that people pay into Britain’s welfare state via national insurance and are therefore “entitled” to the pension when they stop work.
A retired nurse wrote to me to say she doesn’t think the media understands “the small amounts that people have in their state pensions” and said that the state pension, which averages around £12,500 a year, “is not that generous”.
However, a man in his seventies named David offered a more balanced view. “Of course I would like more money,” he wrote, “But I also have a 19-year-old boy, and it is obvious that he will have to pay more and more for pension benefits. As will his peers.”
The issue of the sheer cost of the state pension has become even more urgent since Sir Keir Starmer’s resignation as prime minister. PM-in-waiting Andy Burnham has now pledged to keep the triple lock on the state pension because it was a Labour manifesto commitment.
Allow me to outline the problem. The state pension is an emotional issue. Because everyone in work pays national insurance and income tax throughout their lives, there is a sense that the state pension is an entitlement, and not a benefit of retirement.
There is a misconception about whether the state pension is a benefit because benefits are often associated with people who do not work. The reality, however, is that many people who receive benefits (including Housing Benefit) are also in work and are also paying into the system through tax.
As a nation, we cannot afford the triple lock. Government data shows that spending on the state pension is forecast to reach £146.1 billion in 2025-26, accounting for almost half of the total amount Britain spends on welfare. In comparison, Universal Credit is the second largest at around £88.5 billion.
For context, our spending on the state pension will soon be almost half as much as the £298 billion that Starmer has been scrabbling around trying to find for urgent investment in defence in recent months.
You don’t need me to tell you that there has been price inflation in recent years. However, because of the triple lock, that has resulted in rather hefty pay rises for pensioners, which at times have been above the increases to pay that people in work have had.
The world, and by extension Britain’s economy, has changed immeasurably since the triple lock was introduced in 2010. This politically popular policy, aimed at a demographic known to vote in large numbers, came at a time when pensioner poverty was still a widespread issue. Today, pensioner poverty is still a concern for the Government, but it is far less pressing concern than child poverty, as former prime minister Gordon Brown pointed out to me in an interview.
Former Tory chancellor Jeremy Hunt came out against the triple lock at the end of May. Hunt called the triple lock an “anchor drag” on economic growth and “not only unaffordable but, actually, immoral”.
Hunt said he regretted not “biting the bullet” on this issue when he was chancellor and said that if older people knew that the triple lock was being funded by heaping more debt on their children and grandchildren, they would agree that it was no longer sustainable or fair.
Easy to say that when you’re no longer chancellor, of course. Nonetheless, Hunt also flagged that Britain has been running a budgetary deficit for some time now. It stood at £153 billion for the 2024/25 financial year, equivalent to 5.2 per cent of our Gross Domestic Product (GDP).
A point I often return to this is this: young adults are having children later than previous generations and having far fewer when they do. This is, in no small part, because of the cost of housing relative to wages, which has made it harder to build the sort of life into which a young adult can bring children.
There are now very real concerns amongst economists and demographers that in the not so distant future, Britain’s population won’t have enough young people in work to support the welfare state. That should worry us all.
It’s really very simple: we need more money coming in than is going out, otherwise the country is in trouble. And yet my inbox is full of older people writing to tell me what they are “entitled” to. It’s startling that relatively few of them considered what young people are up against or that the state pension is not means tested – ensuring that even the very wealthiest get it.