The future of the triple lock is in doubt as ministers may have to switch to a “more sustainable” way to determine the increase to the state pension.
In the past two years the policy has delivered large increases to payments, with an 8.5 percent rise this past April and a record 10.1 percent hike last year.
But experts are warning such generous increases could soon be a thing of the past. Fiona Peake, pensions expert at Ocean Finance, said of the policy: “It is becoming increasingly expensive.
“While the triple lock plays an important role in supporting retirees, there are questions about its long-term affordability.
“One possible solution to ease pressure without raising the state pension age could be to adjust or even scrap the triple lock with a more sustainable policy.
“However, this would need to be approached with caution, as reducing pension benefits could disproportionately affect those who rely on the state pension as their primary source of income.”
Another voice warning the triple lock may soon have to change is Chris Ball, managing partner at Hoxton Wealth.
He commented: “Keeping this promise while balancing an ageing population and rising costs may become more difficult for the Government.
“It’s conceivable that the triple lock could be adjusted as part of an effort to keep the state pension affordable without having to raise the state pension age too steeply.”
Mr Ball suggested one alternative the Government could look at. He said: “A potential compromise could involve changing the triple lock formula—perhaps by using a less generous metric or adjusting it during years of significant economic strain.
“Such a change would require careful political handling, as pensioners rely on the triple lock to ensure their income keeps up with the cost of living.”
The full new state pension currently pays £221.20 a week while the full basic state pension is £169.50 a week.
You typically need 35 years of National Insurance contributions to get the full new state pension and 30 years of contributions to get the full basic state pension.
The age when people can currently claim their state pension is 66 although legislation is in place for this to increase to 67 and then 68 over the coming years.
