The rising costs of the state pension have been made plain as the latest figures show another 730,000 people started claiming their state pension over the past year.
There were 12.9 million people receiving the state pension at May 2024, a net increase of 220,000 claimants compared to a year before, as 510,000 claimants have died and so ceased to receive payments.
These new claimants will likely be almost entirely people on the new state pension. The full amount is currently £230.30 but the average amount for men is £209.49 a week while women get on average £205 a week.
Using an average figure between these two amounts of £207.25, these extra 220,000 claimants are increasing the cost of the state pension by an extra £45.6million a week.
Ian Cook, chartered financial planner at Quilter Cheviot, warned that the rising costs of the state pension raise the question of the affordability of the triple lock.
He explained: “While the policy is undeniably popular, it raises critical questions about fiscal sustainability.”
The number of people on the new state pension, introduced in 2016, increased to 4.1 million as of May 2024, an increase of 21 percent compared to a year ago.
If Labour wants to review the state pension, Mr Cook said the party faces a “complex balancing act” to protect pensioners’ income while keeping the system fair for younger generations.
He said retired households have been “protected to a greater degree” during the cost of living crisis, with inflation for non-retired households for the year to September 2024 at 2.3 percent, compared to 1.1 percent for pensioners.
Looking at how the triple lock could be changed, the money expert said: “One potential reform Labour could explore is linking future pension increases more closely to average earnings growth.
“This approach would ensure pension increases align with economic performance, making the system more predictable and sustainable over time.”
Another aspect of state pension policy under scrutiny is the state pension age, which is timetabled to gradually increase from the current 66 to 67, between 2026 and 2028.
This will increase again from 67 to 68 between 2044 and 2046, but there have been suggestions the timeframe for this could be moved forward.
A review of the state pension age was published in 2023 with no firm policy change set out by the Government.
The current Labour Government is set to issue an update on the state pension age within two years of this Parliament.
