Andlsquo;The state pension triple lock does its job

I don't feel bad about it

Steve Webb, who served as pensions minister when the triple lock was introduced, explains why it is vital, on the new episode of BFIA Talks.

The state pension triple lock is estimated to cost the government around 15.5 billion by 2030, putting the policy under intense pressure with many industry experts calling for it to be scrapped. Thanks to the triple lock, pensioners will receive an above-inflation state pension boost of 4.8% starting in April 2026.

The mechanism is considered generous and expensive. Removing the triple lock might be a simple way to free up funds for Rachel Reeves, the desperate chancellor who must close an estimated 20 billion deficit.

But Steve Webb, who was the pensions minister when the triple lock was introduced in 2012 under the ConservativeLiberal Democrat coalition government, argues that it helps tackle pensioner poverty and it is right that the policy stays put.

Speaking on the latest episode of BFIA Talks which can be watched on YouTube or downloaded on any podcast platform Webb says: "I became pensions minister in 2010. But in the previous 30 years, the state pension had been falling in value relative to what people earn, so it just went up with inflation most of the time.

"But the problem with that is if you earn and earn and then stop earning, then the thing you fall onto when you stop earning needs to be connected to some proportion of what you were earning. Otherwise, you just fall off a cliff and your standard of living crashes. Therefore, for 30 years, before the triple lock, the state pension must be based on a percentage of people's earnings.

Webb, who is now a partner at consulting firm LCP, argued that before the triple lock, the state pension was getting worse relative to what people were used to before they retired.

"So, the point of more generous indexation post 2010 was to undo 30 years of damage.

"Im not embarrassed or ashamed; I am proud of the fact that the state pension has been over-indexed, so we link it now to the best of growth in wages, growth in prices or 2.5 percent. This has nudged up the state pension a bit, relative to the average wage. "

The UK state pension is the least generous in the G7 group of the world's most advanced economies, with UK retirees receiving around 22 percent of average earnings from the state pension, much lower than continental neighbour France (with 58 percent) and Italy (76 percent). Webb says he does not think the triple lock system will last forever, but for now, it is there to do a job.

Steve Webb talks about BFIA.

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The triple lock: a boost for pensioners.

In April 2026, 13 million pensioners will benefit from an above-inflation rise to the state pension, thanks to the triple lock. It is worth £550 annually for those receiving the full new state pension.

The increase is an extra 120 compared to what it would have been if it had been uprated by inflation only.

The rate of the full new state pension is expected to increase to just over 240 a week.

The full basic state pension will increase by approximately £440 annually.

"There is an argument that the triple lock is a sop to the grey vote, this is all about older people, and that young people should not have to pay for this, but they young people need a good state pension, dont they" Webb says on the podcast.

The Office for Budget Responsibility noted in a report earlier this year that state pension spending is the second-largest source of upward pressure on government spending, after health, because public finances are vulnerable to inflation shocks and earnings growth due to an aging population.

Although Labour has so far promised not to tamper with the triple lock in this Parliament, its future may still be in jeopardy in the years to come. Additionally, as Reeves continues to face cost pressure, Labour has made numerous policy U-turns, raising concerns that the triple lock may one day be imminent.

In case you missed it, the first podcast episode of BFIA Talks with Rishi Sunak is also available to watch or listen to now.

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